Oral
Answers to
Questions

Energy Security and Net Zero

The Secretary of State was asked—

Energy Price Guarantee Extension

Chris Clarkson: What assessment he has made of the potential impact of the extension of the energy price guarantee on household energy bills.

Grant Shapps: The energy price guarantee has been extended at the same level for a further three months until the end of June. By then, the Government will have covered nearly half of a typical household’s energy bills during this winter, and a third to a half of business bills as well.[Official Report, 12 June 2023, Vol. 734, c. 2MC.]

Chris Clarkson: I welcome the Secretary of State and his entire team to their places in this important new Department. I thank him for his response, but does he agree that the best way to ensure the stability of energy prices long term is to develop our own sovereign supply, with technology such as small modular reactors, hydrogen and nuclear?

Grant Shapps: My hon. Friend is absolutely right. That is why we put £200 million into funding new hydrogen in the “Powering up Britain” document just a few weeks ago. He will know about Great British Nuclear. I intend that we launch a competition, pick a winner for that by the autumn and get on with it.

Dan Carden: If the energy price guarantee is to come to an end in June, surely the logical next step is a social tariff. People have become used to social tariffs from their mobile phone providers and broadband. What is the Secretary of State doing to make sure energy companies introduce a social tariff to target support at the most vulnerable in society?

Grant Shapps: Just to correct the record, it comes to an end in April 2024, so that guarantee remains in place. Wholesale prices in the meantime, fortunately, have been falling—I noticed that they are £98 per therm this morning. We do think that things like a social tariff could be very helpful and the Chancellor has undertaken to look at that as well.

Theresa Villiers: It has made a huge difference to millions of families that the Government have been paying over a third of people’s  energy bills, as part of a bigger package that is one of the most generous in Europe, but can the Minister assure us that the Government are doing everything possible to get inflation down and ensure that we have more sustainably priced energy in future?

Grant Shapps: My right hon. Friend is absolutely right. She mentions a third; in fact, we have been paying around a half of the typical household energy bill this winter, at huge cost. Fortunately, we have seen the wholesale prices fall, and we will start to see that reflected in the energy prices, although we have extended the guarantee—the £2,500. But she is absolutely right in her wider point: it is essential that we get to the cheapest, most plentiful electricity in Europe, and the “Powering up Britain” document aims to do precisely that.

Caroline Lucas: One of the most effective and long-term ways of getting people’s energy bills down would be to invest in a comprehensive, street-by-street home insulation programme, which this Government are still failing to do. Research by the Energy and Climate Intelligence Unit shows that delays to legislating for minimum energy efficiency standards for the private rented sector could cost renters in the leakiest homes an additional £1 billion in higher bills, so with the Energy Bill making its way through the Commons later this year, will the Minister finally end the delay and ensure that those proposals, which the Government first started consulting about three years ago, are legislated for in that Bill?

Grant Shapps: Sometimes, we speak in this House as if we have not actually greened up any of our Victorian housing stock. In fact, back in 2010, only about 14% of houses in this country had A to C on their energy performance certificate; today, that figure is 47%. This year, we will have over half of our homes greened up. We are putting £12.5 billion-plus into it. So we are making rapid progress, which is sometimes not entirely reflected by Opposition parties.

Intergovernmental Panel on Climate Change: Sixth Assessment Report

Lyn Brown: What assessment he has made of the implications for his policies of the sixth assessment report of the Intergovernmental Panel on Climate Change, published on 20 March 2023.

Catherine West: What assessment he has made of the implications for his policies of the sixth assessment report of the Intergovernmental Panel on Climate Change, published on 20 March 2023.

Richard Burgon: What assessment he has made of the implications for his policies of the sixth assessment report of the Intergovernmental Panel on Climate Change, published on 20 March 2023.

Jeff Smith: What assessment he has made of the implications for his policies of the sixth assessment report of the Inter-governmental Panel on Climate Change, published on 20 March 2023.

Graham Stuart: We welcome the IPCC’s latest report. It is a synthesis of global scientific understanding and concludes that, in 2019, carbon dioxide levels were at their highest point in 2 million years, that rapid changes have occurred and that this has led to widespread adverse effects. It does also say that deep, rapid and sustained reductions in greenhouse gas emissions would lead to a discernible slowdown in warming within 20 years, but risks are increasing with each increment of warming. That is why we need the rest of the world to follow this country’s lead in cutting emissions and committing, as this Government have done, to net zero by 2050.

Lyn Brown: We all know that the Government have been opposing onshore wind to appease the extreme views of their own Back Benchers, but the Secretary of State’s Department’s own polling says that, by 20 to one, people support onshore wind. Given the cost of living crisis and the price of gas, and with all that is at stake, how on earth can the Government justify acting in the interests of a very small minority?

Graham Stuart: We all remember that just 7% of our electricity came from renewables in 2010; it is now about half. Our largest single source of renewables is onshore wind. I am pleased to say that the Government are working hard to make sure that we come forward with proposals that have community support, because doing things with communities is what this party believes in; it is a pity that the other party does not believe it, too.

Catherine West: On 2 May 2019, this Parliament declared a climate emergency, yet four years on, the Government are still dragging their feet. Some 4.4 million people rent in the privately rented sector, and that number is going up due to the Government’s incompetence in building more homes. What will the Government do to bring all privately rented properties up to an A, B or C rating as soon as humanly possible?

Graham Stuart: I agree with the hon. Lady on the importance of improving our housing stock. It is not only good for the environment but, just as importantly, it helps to reduce fuel poverty and supports families. That is why, as my right hon. Friend the Secretary of State just pointed out, we have made such impressive strides since the rather woeful situation we inherited: just 14% of homes were properly insulated in 2010—it is about half now. I agree with the hon. Lady that we need to go further and faster, and that is why we are spending that £12.5 billion and why we have set up a dedicated energy efficiency taskforce.

Richard Burgon: New analysis shows that, if the Government allow the Rosebank oilfield off the Shetland Islands to go ahead, it will blow the UK’s climate targets. Rosebank’s developers will get billions in tax breaks due to the deliberate loopholes that the Government have put in their windfall tax, but it will do nothing to lower people’s bills. The United Nations Secretary-General, the International Energy Agency and leading scientists are all saying there should be no new oil and gas, so is it not time for the Minister to rule out Rosebank?

Graham Stuart: I cannot comment on any specific measure, but what I can say is—the hon. Gentleman should recognise this—that we will be using oil and gas for decades to come as we move to net zero. It is estimated that we will require about a quarter of the gas we use today in 2050, and bringing it in from abroad in liquified natural gas tankers will simply mean much higher emissions than gas produced here, so it makes no sense. New licences will only go to slow the very fast decline we already have in North sea production; it will not see production overall increase. Even with continued exploration and development, oil and gas production is expected to decline in this country by 7% a year.

Jeff Smith: There are 23 clean steel projects across Europe, but none in the UK. Forty electric battery factories in Europe are planned to open by 2030, but only one is set for the UK. All the Government offered on their “green day” was weak re-announcements on carbon capture and storage and nuclear, and no new funding for decarbonising industry. British businesses are crying out for more support, so why are the Government failing in their duty to help industry to decarbonise?

Graham Stuart: I share the hon. Gentleman’s enthusiasm for the greening of British steel, as it is at the base of UK manufacture. I am sure he welcomed the “Powering up Britain” proposals, which I presented to the House just before the recess. Our plans for £20 billion of investment in carbon capture and pushing forward with the £240 million fund for hydrogen are exactly the measures we need to decarbonise British industry, and we are global leaders in that respect.

James Gray: I am sure the Minister will agree that one of the best ways we can contribute to achieving the Intergovernmental Panel on Climate Change targets is through outstandingly good British Arctic science and polar science in general, as we have through 78 universities and the British Antarctic Survey itself. Does not the Minister agree that it was disappointing, when the Environmental Audit Committee visited the Arctic over the Easter recess, that we found that the British base up there, 400 miles from the north pole, is only manned part-time? Perhaps I should say “only personned” these days. Is it not time that we had a permanent research base at Ny-Ålesund in the far north of Svalbard?

Graham Stuart: I do not believe this strictly comes under my portfolio, but my hon. Friend has, as ever, brilliantly put this matter on the record and I will ensure others on the Treasury Bench are aware of the remarks he has made.

Energy Bill Relief Scheme

Gagan Mohindra: What recent assessment he has made of the effectiveness of the energy bill relief scheme.

Amanda Solloway: The Government’s assessment of the energy bill relief scheme shows we have spent over £5 billion to date—that is around £35 million a day to help businesses, charities and public sector organisations to pay around half of  their wholesale energy costs this winter. This support has been unprecedented in nature, demonstrating that this Government are always on the side of business.

Gagan Mohindra: Linda from the Kitchen Croxley recently wrote to me about rising costs:
“I have spent nights awake imagining solutions…it would be so easy to give up… But my commitment to our customers and community remain so strong that I cannot do this”.
What is the Minister doing to support hard-working people such as Linda with their energy bills, so that she and other small businesses keep their doors open to customers?

Amanda Solloway: I applaud the work my hon. Friend does to support businesses in his constituency such as the Kitchen Croxley. I understand times are tough for many small businesses, which is why the Government have implemented the energy bills discount scheme, to take effect until April 2024. Businesses fixed into more costly long-term contracts are more likely to receive the energy bills discount scheme payment support due to how the baseline discount is calculated.

Drew Hendry: An effective way to give consumers energy bill relief would be to stop energy companies seeking to increase direct debits while they are holding on to reasonable amounts of credit that belongs to consumers—money that they could use elsewhere. Can the Minister update us on what conversations she has had with Ofgem to ensure that it regulates for that practice, and will she support Members coming to the It’s Your Money campaign in Committee Room 11 at 2.30 this afternoon to show their support for getting that change?

Amanda Solloway: That was an excellent plug by the hon. Member. He will know that I have been engaging with stakeholders—a whole range of stakeholders—including, of course, Ofgem.

Jane Hunt: A steelwork company in my constituency is very concerned that the constructional steelwork sector is not included in the list of industries eligible for higher support under the energy bill relief scheme, despite being a high energy usage business. Without this additional support, which would amount to over £75,000 for the company, it will inevitably have to pass on its additional costs to its customer, which is the Government. Will the Minister please review the eligibility criteria and consider adding the constructional steelwork sector to the list of eligible industries?

Amanda Solloway: The energy bill relief scheme is expected to cost £7.3 billion over its duration. It provided a discount on the wholesale element of gas and electricity to ensure all businesses and non-domestic customers were protected from excessively high energy costs over the winter period. Of course, the EBDS will continue to provide a discount eligible to non-domestic customers, with a higher level of support provided under the energy-intensive industrial element of the scheme, which will be available to most energy and trade-intensive businesses, primarily in the manufacturing sector.

Tim Farron: Our hospices provide tender, professional, essential care for people nearing the end of their lives, yet they are considered, when it comes to energy bill relief, as businesses. As a consequence, despite the fact that they have had a 350% increase in their energy costs, there is not a special programme or specialist scheme to assist them. I have raised this with the Minister before. What progress has she made in looking at a package to help to support our hospices and others who care for those in desperate need in our communities?

Amanda Solloway: I thank the hon. Member for bringing up such an important subject. He will be pleased to know that this week I met Hospice UK to discuss that very subject and, indeed, I am working to see how we can be the most supportive.

Non-domestic Meter Customers

James Duddridge: What steps his Department is taking to improve support for non-domestic meter customers.

Amanda Solloway: The new energy bills discount scheme will continue to support all eligible businesses and non-domestic customers with their energy bills from 1 April 2023 until 31 March 2024. This follows on from the unprecedented £7.3 billion expected to be delivered through the energy bill relief scheme over the course of the last winter.

James Duddridge: Many residents of East Beach residential park are grateful that they can access the energy bill support scheme alternative fund, but what steps is the Department taking to contact and help those who are not aware of the benefits of these schemes to identify what they are?

Amanda Solloway: My hon. Friend is right to highlight the energy bill support scheme alternative funding, providing £400, and £600 in Northern Ireland, to households who do not have a domestic electricity supply and therefore have not received the main EBSS payment. It is up and running and I urge all Members to encourage their eligible constituents, including those in park homes, to apply via gov.uk.

Bill Esterson: British businesses pay among the highest energy bills anywhere in Europe, yet Make UK said the Government’s plan
“does little to tackle the real and immediate threat manufacturers face with rocketing energy bills.”
If the Government really wanted to support business, they would implement Labour’s plans, help small firms with energy efficiency, cut business rates and invest in renewable electricity generation for the long term.

Lindsay Hoyle: I call the Minister.

Bill Esterson: The Labour party is on the side of business—

Lindsay Hoyle: Order. Mr Esterson, please do not take advantage of the Chamber; other colleagues want to get in as well. It is totally unfair

Amanda Solloway: This Government have an unprecedented record in helping both domestic and non-domestic customers, and the energy bills discount scheme will continue to provide a discount to eligible non-domestic customers, with a higher level of support provided under the energy and trade-intensive industry element of the scheme.

Energy Efficiency Measures: Installation

Daniel Zeichner: How many and what proportion of homes had energy efficiency measures installed in (a) 2010 and (b) 2022.

Clive Lewis: How many and what proportion of homes had energy efficiency measures installed in (a) 2010 and (b) 2022.

Andrew Bowie: The Government have made very good progress: 47% of homes in England have now reached the Government’s 2035 target of achieving EPC C levels, up from 14% in 2010—a 133.7% increase. In 2010, the Government supported the installation of around 968,100 measures. In 2022, the Government supported the installation of around 204,000 energy efficiency measures in around 94,500 households. Around 1 million homes will be upgraded with improved energy efficiency between now and 2026 through our help to heat schemes.

Daniel Zeichner: That is a very partial account of the story, I have to say. The Minister will know that in 2010 the Government inherited a functioning scheme from the Labour Government that meant hundreds and hundreds of homes in my constituency, and possibly his, were being insulated. Come forward 10 years and what do we see: that scheme has absolutely crashed, so can the Minister tell us just how much that decade of Tory failure has cost our constituents?

Andrew Bowie: A decade of Tory failure? That is complete nonsense. We have had a 133.7% increase from 2010, when, by the way, we inherited a situation where only 14% of the country had EPC C levels. We are now at 47% and from 2010 to 2022 the Government supported the installation of around 8 million energy efficiency measures.

Clive Lewis: I know Front Benchers have already expressed their commitment to local communities and local people driving our economy forwards to a sustainable transition and future. With that in mind, may I point them to my own local authority, Norwich City Council, and its Goldsmith Street award-winning council housing—safe, secure, affordable homes that it has built on a shoestring budget after millions of pounds of cuts to its budget? What conversations have Ministers had with the Chancellor to ensure other councils can drive this programme forward to ensure every street is like Goldsmith Street?

Andrew Bowie: We in this party and this Government support community-led initiatives just like the one the hon. Gentleman referenced and we are consulting on how we can further support community projects. I would be delighted to discuss that particular project with him in more detail in due course.

Andrew Bridgen: Will my hon. Friend outline how the energy efficiency taskforce will help support energy efficiency across the UK?

Andrew Bowie: The energy efficiency taskforce is committed to driving forward energy efficiency measures throughout the United Kingdom and, on that measure, I would be delighted to meet with him if he has any further ideas on how we can go even further and faster to drive forward energy efficiency measures across the country.

Lindsay Hoyle: Minister, I am this way, not that way.

Andrew Bowie: I am terribly sorry, Mr Speaker.

Richard Bacon: I join my parliamentary neighbour, the hon. Member for Norwich South (Clive Lewis), in congratulating Norwich City Council on what it has done in Goldsmith Street. Is the Minister aware of what proportion of self-commissioned homes have the highest energy rating? Is he aware that triple glazing is almost standard in self-commissioned homes? What is he doing to encourage the Department for Levelling Up, Housing and Communities to have more self-commissioned homes?

Andrew Bowie: Before I go any further, I congratulate my hon. Friend on championing the self-build housing sector and that house building sector on doing what it can, moving so far and so fast, to improve energy efficiency measures across the buildings it has been producing over the past few years. Once again, as he is a subject matter expert, I would be delighted to meet him to discuss it in more detail in due course.

Renewable Energy Projects: Connection to the Grid

Seema Malhotra: What assessment his Department has made of the adequacy of lead times for connecting renewable energy projects to the grid.

Anna McMorrin: What assessment his Department has made of the adequacy of lead times for connecting renewable energy projects to the grid.

Andrew Bowie: Reducing connection timescales is a high priority for the Government. We will publish a connections action plan in the summer, which will articulate actions by Government, Ofgem and network companies to accelerate network connections for renewable energy and other projects.

Seema Malhotra: It is a disgrace that while energy prices rocket, huge delays to grid connections are holding back the supply of renewable energy to UK homes and businesses. Wind farms coming online today were approved when Gordon Brown was in power. Even now, energy companies are having to wait for 13 years, until 2036, for connections for some projects. How on earth did it  get this bad? Is it not true that the Tories have taken their eye off the ball on the National Grid, and it is now costing British families and businesses dear?

Andrew Bowie: I thank the hon. Lady for her question. It is interesting that she references Gordon Brown, because it was under his Administration that the decision was taken not to invest in new nuclear, which, by the way, would have solved part of the problem we find ourselves in right now. However, I think everyone in the House would acknowledge that the situation regarding grid connection times is not acceptable. That is why we have commissioned the Electricity Networks Commissioner, Nick Winser, to submit recommendations to the Government on how we accelerate delivery of network infrastructure. He will publish his report in June.

Anna McMorrin: The Minister completely failed to answer the question. The CEO of Solar Energy UK has said that solar infrastructure projects are being delayed into the 2030s—15 years or more—meaning that operators will not connect them to the grid. Renewable energy is cheap and will help to bring down the current absurd energy prices. Are the Government purposely trying to keep energy prices high and at the mercy of fossil fuels, firmly leading us on the highway to climate hell?

Andrew Bowie: Frankly, that question is utterly ridiculous. It is because of the Government’s investment in new renewable technology that we are powering ahead and leading the world in reaching our net zero obligations. Half our energy now comes from renewable sources. I have already acknowledged that the delays to grid connections are completely unacceptable, which is precisely why we commissioned Nick Winser to develop his report. We will be publishing his recommendations in June.

Bim Afolami: Just to bring down the temperature a little bit, the Minister referenced the Government’s consultation later this year on how the Government, with Ofgem, will drive forward investment in the grid. Is the Government’s vision for more investment in a system similar to what we have now? To what extent do they want to move towards a more decentralised system for renewable investment in the grid, so that local communities can invest their own efforts and resources in developing their own renewable energy?

Andrew Bowie: I thank my hon. Friend for his question. In March, we launched consultations on community benefits for transmission network infrastructure and on supporting the consenting process to revise energy national policy statements. We are also supporting a private Member’s Bill on alternative dispute resolution for compensation disputes over land.

Priti Patel: The Minister will know that the east of England does a lot of heavy lifting when it comes to renewables; we are investing in turbines and offshore wind. But he will also know that local communities across the entire region are horrified by National Grid’s plans to build pylons across the entire region, which will connect and increase more energy supply. They favour an offshore grid. Can I ask the Minister directly: what is he doing to work with the local community to deliver that option?

Andrew Bowie: The east of England does do a lot of heavy lifting for renewables—almost as much as the north-east of Scotland—but this is not a competition. I am delighted to inform my right hon. Friend that I am visiting East Anglia next week to meet communities in the area. Indeed, I met producers and manufacturers yesterday to see what they can do to mitigate the impact on her local community and other communities in the region.

Alan Whitehead: If we are prevented from building renewable power in the first place, connection times become rather a moot point. Will the Minister explain why he has failed to lift the ban on onshore wind, despite the Government saying that it would be lifted by the end of April?

Andrew Bowie: This Government are committed to onshore wind as a huge part of our renewable energy mix—14 GW, in fact. We are also committed to new renewables offshore and to new nuclear, which the Labour party opposed for such a long time. It will be a whole collection of those new technologies and infrastructure projects that will help us drive our way towards our net zero ambitions and the cleanest and cheapest electricity in Europe.

Alan Whitehead: That wasn’t very good, was it? The Government’s own offshore wind champion Tim Pick said last week that we will miss our 2030 offshore wind ambitions by more than 10 GW because of poor grid connections. Even with the lifting of the onshore ban—if we believe the Minister—developers will not invest given the prospect of a 13-year delay in grid connection. When will the Minister commit to a speedy programme of grid capacity building, to give onshore and offshore wind a good chance of success?

Andrew Bowie: As I said, this country is leading the way in investment in new renewable technology. We acknowledge that there are difficulties connecting to the grid, and we are investing in improving that. Nick Winser’s report is coming in June, which will give recommendations to Government on how to reduce the timescale for connecting those new projects to the grid. That is the focus of this Government, not playing politics. We are taking real decisions to benefit this country, to cut our carbon emissions and to reduce energy bills across the piece.

Energy Transition Projects in Scotland

Stuart McDonald: What steps he is taking to support energy transition projects in Scotland.

John McNally: What steps he is taking to support energy transition projects in Scotland.

Andrew Bowie: We are supporting Scotland’s energy transition through the North sea transition deal. Additionally, 44 of the 161 projects awarded contracts for difference for renewable electricity are in Scotland. More recently, we have allocated £81.1 million of funding to 81 locations throughout  Scotland—I have a list, but I will not go through them—as part of the £1 billion net zero innovation portfolio, from 2021 to 2025. Furthermore, we have committed to funding the Aberdeen energy transition zone by £27 million, and the global underwater hub aimed at diversification for the subsea sector by £6.5 million.

Stuart McDonald: There was a lot to take in there. Recent positive noises around the Acorn carbon capture project near Peterhead are obviously welcome, albeit with the caveat that we have heard a lot of this before. Can the Minister confirm what funds track 2 projects will get and when Acorn funding will be confirmed, or at least when such announcements will be made? Does he agree that track 2 projects must proceed much faster than track 1, both because of the climate emergency and so that we can seize the opportunity to be world leaders in that technology?

Andrew Bowie: The hon. Member is absolutely right that there was a lot to take in, because the UK Government are doing so much to support Scotland’s energy transition. On Acorn, he does not recognise that this Government have already invested £40 million of funding in the project—most notably, £31.3 million under the industrial decarbonisation challenge. I have the breakdown of the funding, if Mr Speaker will allow me: £31.3 million from the industrial decarbonisation challenge for onshore and offshore front-end engineering design studies; £9.3 million of innovation funding for CCS innovation and advancing CCS technology and hydro supply programmes; and £250,000 for the development of Storegga’s Dreamcatcher direct air capture plant. Track 2 has been announced—

Lindsay Hoyle: Order. Minister, do not tempt me.

John McNally: I wish the Minister would slow his answers down—that was a bit of a blur. Just last week, Harbour Energy announced that it is cutting 350 highly skilled and valued jobs in Aberdeen, directly linking that to the poorly implemented energy profit levy. We warned many times that it would disproportionately affect Aberdeen and Scotland and, unfortunately, we have been proven right. Will the UK Government commit to matching the Scottish Government’s £500 million just transition fund, and protect our energy workers?

Andrew Bowie: I am afraid I have to take all that with a massive pinch of salt. Now it turns out that the SNP is against a windfall tax on the oil and gas industry, when it had been campaigning for such a tax for weeks and weeks, months and months. We have introduced the energy profits levy to deal with the immediate crisis regarding energy bills, but we have built into that investment opportunities for companies to continue to innovate, create jobs and develop our offshore oil and gas fields, because we will be reliant on them as a transition fuel for many months to come. This Government are committed to jobs and opportunities in north-east Scotland, unlike the Scottish National party that would close it down tomorrow.

David Mundell: I am sure the Minister will be able to give me a short answer to this question. Does he agree with me that what transition in Scotland definitely does not involve is some knee-jerk shutting down of the oil  and gas industry, especially given that liquid gas supplied by tankers has two and a half times the emissions of gas produced in the North sea?

Andrew Bowie: Yes, I completely agree with my right hon. Friend. He is absolutely right on this issue. Indeed, shamefully, Scottish Government Minister Patrick Harvie, a member of the SNP’s partner in Government, the Green party, said that oil and gas workers in Aberdeen should simply get on their bikes and look for other jobs, instead of investing in the industry, which this Government are doing.

Lindsay Hoyle: I call the spokesperson for the Scottish National party.

Alan Brown: If we want a proper just transition and greater supply chain security, we need new manufacturing facilities for renewable energy components. Which suppliers and manufacturers has the Minister spoken to about creating new manufacturing facilities in Scotland? How many new Scottish manufacturing and renewable energy jobs do this Government intend to create?

Andrew Bowie: We are absolutely committed to building a UK-based supply chain, and that includes, of course, new jobs in Scotland. I would be delighted to meet my Scottish Government counterparts and the hon. Gentleman to discuss how we can progress that further and faster. If we are going to have an even more successful renewable energy industry in this country, it is essential that we have a UK-based supply chain. That is what this Government are committed to achieving and, moving forward, I would be happy to work with anybody so that we can do that.

Alan Brown: Obviously, I am happy to meet the Minister and work with him, but what I heard right there was that there is no plan for manufacturing jobs in Scotland, no plan to match fund the just transition fund, no answer to the job losses at Harbour Energy and no firm commitments on timescales for Acorn, and that the tidal stream funding has been halved. There is nothing happening to match the Inflation Reduction Act in the United States and the EU support packages. Is it not the case that at the moment just transition are simply warm words for this Government and that much more needs to be done?

Andrew Bowie: Absolutely not. I have gone through in detail exactly what we are doing in Scotland. Indeed, his colleague, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) suggested that there was far too much in my initial answer to demonstrate what we are doing to support transition in Scotland. We will continue to do that, while championing jobs and opportunities across the whole United Kingdom, including in Scotland. That means investing in new technologies and renewables, and supporting our oil and gas industry as it transitions. All of that is possible because Scotland remains in the United Kingdom, which would not be the case if the hon. Gentleman had his way.

Clean Energy Technologies: Private Sector Investment

Alok Sharma: What steps he is taking to help increase private sector investment in clean energy technologies.

Graham Stuart: Our “Powering up Britain” plan seizes opportunities from our transition to a decarbonised energy system. Our policies, backed by billions of pounds of Government funding, will leverage around £100 billion of private investment and support up to 480,000 jobs in 2030. My right hon. Friend is absolutely right to highlight the importance of unlocking that private investment if we are to deliver our net zero ambitions.

Alok Sharma: One of the ways to ensure more private sector investment is to support UK companies to export to key markets. With that in mind, will the Minister update the House on any discussions between the UK and the US Governments on critical minerals? Is he confident that there will be an agreement between the UK and the US on critical minerals, allowing UK companies to gain access to the financial support available in the Inflation Reduction Act, on which other blocs such as the European Union are already doing deals?

Graham Stuart: I thank my right hon. Friend for his question. He shares my enthusiasm for leading the world in meeting our net zero challenge and, by doing so, developing technologies and then being able to export those solutions. He is right to highlight issues following the Inflation Reduction Act in the United States, and making sure that in the negotiations with the US and other partners, critical minerals and other issues are dealt with. We are engaging solidly and I know my right hon. Friend was in Japan only last week, talking to Secretary Kerry about that point.

Hilary Benn: In 2021, approximately 60,000 heat pumps were installed in the UK, compared with 1.5 million gas boilers. According to the European Heat Pump Association, we have the lowest number of heat pumps installed in the whole of Europe, relative to population. What more can the Government do to change that?

Graham Stuart: The right hon. Gentleman is absolutely right that the decarbonisation of heat remains a major challenge and we need to do more. With the launch of “Powering up Britain”, on which I made a statement to the House just before the recess, we are using £30 million of Government money to leverage £300 million in private investment, but I agree that we need to do more to change the trajectory if we are to meet the target of 600,000 heat pumps a year by 2028.

Lindsay Hoyle: I call the shadow Minister.

Kerry McCarthy: Since the passage of the Inflation Reduction Act, clean energy companies have announced more than 100,000 new jobs in the US. Nearly 10 times more new jobs have been created there in the past seven months than in the UK’s green economy in the past seven years. British business wants a proper response to IRA, yet all we have had is the Secretary of State denouncing it as “dangerous”. Is not the biggest danger that of Britain being left behind in the global race as others speed ahead?

Graham Stuart: It is ironic that the hon. Lady says that. We have already set out the position: our energy efficiency figures have gone from 14% to about 50%, and  our renewable electricity figures have gone from 7% to about 50%. The rest of the world, I am pleased to say, is playing catch-up.

Ed Miliband: indicated dissent.

Graham Stuart: It is playing catch-up. The Opposition do not believe in powering Britain from Britain, and they do not believe in supporting the record. The truth is that the UK has cut its emissions by more than any other major economy. Rather than hosing credits in the direction of businesses, we have a regulatory system that encourages investment.

Kerry McCarthy: That is just ridiculously complacent and out of touch. Only this weekend, it was reported that Britain’s only home-grown battery manufacturer is considering leaving the UK for the US, and it is not alone. The Government are absolutely at sea as to what Britain should do. They say simultaneously that IRA is dangerous, that we are doing it already and that the Chancellor will get around to responding to it in the autumn, more than a year after the Act passed. When will they realise that dogma, dither and delay are harming our country?

Graham Stuart: The truth is that the rest of the world is playing catch-up. Our regulatory systems—the contracts for difference, for instance—have entirely unlocked renewables in this country. We are continuing to accelerate that, for example with the grid, which is also an issue in the United States. We take our competitive situation extremely seriously and will continue to come forward with policies to ensure that we maintain our global leadership.

Families in Fuel Poverty

Mohammad Yasin: What estimate his Department has made of the number of families in fuel poverty.

Tan Dhesi: What estimate his Department has made of the number of families in fuel poverty.

Vicky Foxcroft: What estimate his Department has made of the number of families in fuel poverty.

Catherine McKinnell: What estimate his Department has made of the number of families in fuel poverty.

Amanda Solloway: In 2022, an estimated 3.26 million households were in fuel poverty in England. The Government recognise how difficult the increase in fuel bills caused by Putin’s war in Ukraine has been for households across the country. That is why the Government have stepped in to provide unprecedented energy bill support to households this winter.

Mohammad Yasin: Will the Minister confirm when the energy bills discount scheme will be distributed to customers such as my vulnerable 81-year-old constituent Ann? Her bills have soared by more than 400% because she receives her energy via a communal system that is   not protected by the same Ofgem energy price cap that applies to individual domestic consumers. Will the Minister confirm future bespoke support for heat network customers?

Amanda Solloway: I reiterate that we have been giving unprecedented support to domestic and non-domestic customers throughout this incredibly difficult situation, and we are making sure that we review the situation on an ongoing basis.

Tan Dhesi: At a time when many of my Slough constituents are struggling to pay their energy bills, oil and gas giants are raking in the windfalls of war, but the Prime Minister and his Government are too weak to stand up for the British people, and especially for the increasing number of households now living in fuel poverty. Energy efficiency measures are one of the best routes to tackling fuel poverty, but unfortunately not a penny of new money was announced in the Government’s relaunch just last month. Why is there such complacency when installation rates in 2020 were 20 times lower than in 2010?

Amanda Solloway: It has been estimated that without the additional support, a further 350,000 households in England would have been in fuel poverty in 2022. Energy efficiency improvements remain the best way to tackle fuel poverty in the long term and contribute to long-term reductions in both energy bills and carbon emissions, in line with net zero.

Vicky Foxcroft: One of my constituents and his partner have two young children, one of whom has a medical condition. In August last year, they were charged £778 for gas and electricity—18 times the bill of £43.15 from the previous February. My constituent is living in fuel poverty and struggling to feed his family. What steps is the Minister taking to ensure that families requiring high energy usage medical equipment do not fall into fuel poverty?

Amanda Solloway: I share the hon. Lady’s concern. I have been meeting various stakeholders, including representatives of citizens advice bureaux, to discuss how we can mitigate the situation, but I should add that we have been providing unprecedented support throughout.

Catherine McKinnell: Last year, Citizens Advice Newcastle saw a 229% increase in the number of people facing disconnection and needing help with energy top-up costs. While today’s announcement from Ofgem is welcome, it will still allow those who are deemed to be at medium risk—parents of children under five, pregnant women and those aged between 75 and 84—to be forced to have prepayment meters installed. What more will the Government do to ensure that vulnerable people will not be forced to have those meters installed and to face living without heat and light?

Amanda Solloway: The abuse of prepayment meters in recent months has been disgraceful. We have demanded urgent action, and we welcome the code of practice announced today. As I have said, I have been meeting representatives of citizens advice bureaux across the country, and we are discussing how we can continue to provide the unprecedented support that we have already been giving.

Christopher Chope: Many of the people who are in fuel poverty live in park homes. Perhaps the Minister would be interested in meeting me, in my capacity as chairman of the all-party parliamentary group on park homes. At a meeting of the APPG yesterday, considerable concern was expressed about the fact that the alternative funding scheme was not delivering for many park home residents because of anomalies and inflexibilities. The Department for Levelling Up, Housing and Communities has written to the Minister’s Department about this, but has not yet received a response.

Amanda Solloway: As I have said, I am always keen to meet stakeholders, and of course I should be happy to meet my hon. Friend.

Topical Questions

Jack Brereton: If he will make a statement on his departmental responsibilities.

Grant Shapps: Since we last met, the Department has been active in, for instance, publishing the “Powering up Britain” document. In the last week, I have been in South Korea and Japan, where we negotiated with the G7 an update to the climate energy security plan, and a large number of our partner G7 countries expressed the view—not always recognised throughout the House—that this country leads when it comes to the green transition in energy.

Jack Brereton: Energy costs remain a major concern for many businesses. In particular, as has been recognised, the tying of electricity prices to the price of gas is raising energy prices to unnecessarily high levels, which is deterring investment in electrical technologies and forcing businesses to continue to invest in gas-powered technology. Will my right hon. Friend tell us when the decoupling of electricity and gas prices will actually happen?

Grant Shapps: This decoupling is a particularly complex matter, but we are absolutely into the detail of it. As my hon. Friend knows, the connection between electricity and gas prices is to do with the way in which the contracts have been written. We are conducting a review of the electricity market, and we are also looking at the way in which some of the existing standing costs are allocated between gas and electricity, with the aim of achieving precisely what my hon. Friend is after.

Lindsay Hoyle: I call the shadow Secretary of State.

Ed Miliband: Today’s announcement on prepayment meters is simply not good enough. The new rules ban forced installations for only a very narrow group and do not do so for what is called the medium-risk group. I am reading from the document here. That group includes
“those with Alzheimer’s, clinical depression, learning difficulties, multiple sclerosis…the elderly up to age 85, the recently bereaved, and those with the youngest children.”
How has the Secretary of State allowed this to happen?

Grant Shapps: I think the House recognises that we have moved very fast on prepayment meters—[Interruption.] The same rules were in place when Labour was in power for 13 years. We are the ones—[Interruption.] I am reminded that the right hon. Gentleman probably set the rules in the first place, but I will have to fact check that for the record. We have taken a number of steps to relieve that pressure and I am pleased to see the Ofgem announcement today. We will keep this matter under review and go further if required.

Ed Miliband: What a completely hopeless answer. There is a high-risk group for whom a ban is being put in place and a medium-risk group for whom the Government are leaving this at the discretion of the energy companies, which is simply not good enough. Will the Secretary of State now instruct the regulator to keep the forced installation ban in place until he meets the promise he made—which is being broken today—to protect all vulnerable customers?

Grant Shapps: It is an Ofgem announcement today, which I welcome because I asked Ofgem to go away and come to a voluntary agreement. It is actual action that makes a difference. What the right hon. Gentleman needs to explain is how, if we did not have some sort of measure in place to allow people to install meters to manage those finances, he would deal with all the additional cases that would end up in court. As ever, he gives simplistic answers in a complex world that I would not expect him to even start to address.

James Duddridge: Potton island and Foulness island in the Rochford district would very much like to see onshore wind farms. What incentives can the Government bring forward when onshore wind comes back online?

Graham Stuart: The Government want communities to participate in and benefit from onshore wind proposals for their areas, and we will shortly issue a consultation on onshore wind partnerships in England to enable supportive communities hosting new onshore wind infrastructure to enjoy the benefits of doing so, exactly as my hon. Friend says, by getting developers to support local energy discounts, new community infrastructure projects and the like.

Rachel Hopkins: Energy-intensive businesses need Government support to transition to a low carbon economy, including the Vauxhall van plant in Luton South, yet last month’s “green day” saw only weak reannouncements on carbon capture and storage and nuclear, and no new money for industry. Can the Minister explain why the Government are failing to help our motor manufacturing industry to decarbonise?

Amanda Solloway: We have announced an unprecedented £20 million investment in the development of carbon capture, utilisation and storage and a £185 million extension to the industrial energy transformation fund, and confirmed the first winners of the £240 million net zero hydrogen fund. In   addition, this Government have provided more than £2 billion since 2013 to energy-intensive industries to make electricity costs more competitive.

Peter Aldous: Maximising investment in renewables is vital to bringing new jobs to coastal communities such as Lowestoft. I would be grateful if my right hon. Friend confirmed that he  is working closely with the Treasury to prepare a comprehensive fiscal strategy that will form part of the autumn statement, and that it will include tax incentives, the reform of capital allowances and measures to unlock private investment in ports.

Graham Stuart: My hon. Friend will be pleased to hear that we always work closely with our Treasury colleagues. We launched the floating offshore wind manufacturing investment scheme—FLOWMIS—on 30 March, which is worth up to £160 million and will support investment in port infrastructure precisely to unlock floating offshore wind investment and deployment. The spring Budget set out the Government’s plans to launch the refocused investment zones programme to catalyse 12 high-potential growth clusters across the UK.

Wera Hobhouse: The Under-Secretary of State for Energy Security and Net Zero, the hon. Member for Derby North (Amanda Solloway) has just mentioned the Government’s ambitious plans for CCUS. The Petra Nova carbon capture facility in the US was meant to reduce carbon emissions by 90%, but it achieved only 7% over three years and allowed the continued extraction of fossil fuels. What will he do to ensure that UK Government investment in CCUS goes only to truly net zero projects?

Graham Stuart: The hon. Lady is right to highlight the technical challenges. The Labour Government said in 2003 that CCUS implementation was urgent. No one thinks there is a route to 2050 without CCUS and, as she says, it is important not only that we make the investments we are making, but that we do so in a way that is compatible with the highest possible capture percentage.

Paul Holmes: The Government’s commitment to park home payments is welcome, but residents in Eastleigh are still awaiting their payments because the council says it does not have access to Government systems. Will the Minister make sure her officials speak to Eastleigh Borough Council today to get this sorted? Will she commit to writing to let me know what has gone wrong so that we can get my constituents the payments they need?

Amanda Solloway: All the councils that are able to participate in the scheme have received the money from the Government, with 99% of local authorities onboarded so far. Ninety five per cent. of councils are processing claims, with the majority of applications having been accepted and paid. However, we are working to understand the specific problem in Eastleigh, and I will update my hon. Friend as soon as I can.

Chi Onwurah: The experience of my constituents who are on prepayment meters is atrocious, and today’s announcement  from Ofcom will do absolutely nothing to protect vulnerable groups such as those with Alzheimer’s, the under-fives and those who are over 75 but under 85. Will the Secretary of State answer the question he did not answer earlier, and say why he is not protecting the vulnerable from prepayment meters and the lack of energy support?

Grant Shapps: Just to correct the record, Ofgem is in charge. The measures it put out today, with industry agreement, will help to protect people. When a person’s payments are in deficit, they have to find a way out. The hon. Lady appears to favour a system in which, rather than installing a prepayment meter, people are immediately taken to court, which I do not think is a good solution. We will carry on working with Ofgem to make sure we put the best solutions in place.

Martin Vickers: Ministers will be aware that the Humber region has attracted £15 billion of private sector investment in carbon capture projects. Needless to say, there was widespread disappointment when none of those projects was included in track 1. Is the Minister able to give the clarity that the private sector needs?

Grant Shapps: My hon. Friend is right about the possibilities for CCUS. The £20 billion fund was competitive, and others, including HyNet on the east coast, won. When it comes to the Humber cluster, both the track 1 expansion and track 2 will happen later this year.

John Spellar: British industry has supplied small modular nuclear reactors to the Royal Navy for more than 60 years, giving us a head start on the exciting commercial application of this zero carbon energy technology. Why is the Minister undermining and delaying its progress by going through an unnecessary so-called international competition, rather than backing British engineering excellence and British workers?

Grant Shapps: That is a brilliant question. What happened during all those years when the Labour party was against civil nuclear power? This Government are moving ahead, and we have set up Great British Nuclear and funded Rolls-Royce with £210 million and counting. I have already said from this Dispatch Box that we are starting a competition now to select a winner in the autumn. Where were Labour Members when we were doing all this?

Maria Miller: I have already met the Minister for Energy Security and Net Zero to discuss the National Fire Chiefs Council’s concerns about the use of lithium-ion storage facilities to get renewable energy to the grid. Will the Government review existing fire and environment regulations to ensure they reflect these deep concerns and risks, and help to ensure that renewable energy can get to the grid smoothly and in a timely manner?

Andrew Bowie: Grid-scale lithium-ion battery energy storage systems are covered by a robust regulatory framework, which requires manufacturers to ensure that products are safe before they are placed on the market, that they are installed correctly and that  any safety issues found after products are on the market are dealt with. I am meeting my right hon. Friend this week to discuss this in more detail and I look forward to that very much.

Liz Saville-Roberts: The Minister must surely recognise that fuel poverty cannot be solved by threatening to send vulnerable people to court or imposing the installation of smart meters. When will he stop passing the blame to Ofgem? When will he really start to support vulnerable people who are facing fuel poverty?

Amanda Solloway: It is incredibly important to this Government that we support vulnerable people. We are looking at all of the issues around prepayment meters, but we have provided £400 of support through vouchers and I encourage all Members to ask their constituents to come forward to get those if they have not already collected them.

Mark Pawsey: In Rugby, we are proud of the rate at which we provide new homes. I recently visited Barratt Homes’ Ashlawn Gardens development, where I heard that intending purchasers of new homes now place an enormous priority on the size of their energy bills. Does the Minister agree that it is important for house builders to promote the thermal efficiency of their products?

Graham Stuart: I entirely agree with my hon. Friend on that. This is why we set up the energy efficiency taskforce, to work with industry to make sure that we take forward a tremendously transformed situation from the appalling one in 2010 and accelerate and move forward even more quickly in the future.

Christine Jardine: More than once this morning those on the Government Benches have congratulated themselves on the home insulation figures, but those figures could and should have been so much more impressive, if, after 2015, this Government had not abandoned Liberal Democrat policies to invest in renewables and insulate homes. The impact of that on my constituents has been fuel poverty. This winter, they are struggling to heat their homes, with still expensive carbon fuels, and there is a growing incidence of mould. When will the Government recognise that emergency insulation is needed?

Grant Shapps: We have worked very hard on making sure that homes are insulated. We have just announced another £1 billion for the Great British insulation campaign, which makes £12.5 billion over this Parliament and into the next one for insulation. That is one reason why nearly half of homes are now insulated, whereas the figure when Labour was in power was only 14%.

Peter Gibson: I welcome the £12 million from the social housing decarbonisation fund and the home upgrade grant for Darlington, which will help cut heating costs and carbon emissions, and reduce fuel poverty for my constituents. May I invite the Minister to visit the fantastic Darlington economic campus, where some of his team are situated?

Andrew Bowie: I am very glad to hear about the successful funding bids in my hon. Friend’s constituency. These schemes will improve homes up and down the country, improving their energy efficiency and lowering energy bills. I am delighted to accept the invitation to visit the Darlington economic campus, although I can confirm that I have already visited it and was incredibly impressed by the calibre of the individuals working there to drive forward our ambition—

Lindsay Hoyle: I call Dame Diana Johnson.

Andrew Bowie: —to get this country the greenest, cleanest electricity in Europe.

Lindsay Hoyle: Minister, that is the last time you do that to me. Seriously, you are taking advantage of this Chamber too much. You were enjoying yourself earlier, which was fine, but I am not consistently having you dictate to the Chair. Do we understand each other?

Andrew Bowie: Yes.

Lindsay Hoyle: I do hope so.

Diana R. Johnson: With the Humber estuary responsible for 40% of all industrial emissions in this country, it beggars belief that it was not included in the track 1 for carbon capture. Will the Minister now guarantee that the Humber cluster will be included in the expansion that he just talked about, as it brings £15 billion-worth of private investment with it?

Grant Shapps: The right hon. Lady is absolutely right about the potential of the Humber cluster. I want to put that on the record, as well as the fact that track 1 and track 2 announcements will be made later this year. It is perhaps a testament to the amount of competition for carbon capture, usage and storage that this country has sufficient space to store 78 billion tonnes of carbon, which is the equivalent of about 200 years of all Europe’s carbon being stored in the North sea. There is just heavy competition for where it goes.

Top Secret Document Leaks

Tobias Ellwood: (Urgent Question): To ask the Secretary of State to make a statement on the leaking of top secret military documents.

James Heappey: The unauthorised disclosure of classified US documents discovered last week was clearly a concerning development. The Defence Secretary spoke to his opposite number in the US last week and has been kept closely informed since. He is in Washington this week for a long-planned briefing to the House Foreign Affairs Committee as well as for other bilateral meetings. Clearly, while there, he has been able to discuss things further with Secretary Lloyd Austin and others. The US Department of Defence and intelligence community are currently conducting their own investigation to determine the validity of those documents and the circumstances under which they were leaked.
The UK commends the swift action taken by US law enforcement to investigate and respond to the leak, including the arrest of a suspect. As the Secretary of State, the US Department of Defence and the French Ministry of Defence have already said, not all of this information apparently leaked is accurate. Colleagues will be frustrated, I know, that I am unable to tell them which bits are inaccurate as these are sensitive intelligence matters, but it is important, nonetheless, to stress the need for caution when reporting what has apparently been leaked. Obviously, the investigation is now a matter for the US legal system.
As the refreshed integrated review set out earlier this year, the US remains the UK’s most important ally and partner. The depth of the UK’s relationship with the US remains an absolutely essential pillar of our security. We remain committed to supporting Ukraine’s armed forces in response to Russia’s illegal invasion. Ukraine has repeatedly shown us its determination and resilience in the face of Russia’s barbaric invasion, and, as we have said, we are working in lockstep with allies through forums such as the G7 and NATO, and efforts such as the UK-led international fund for Ukraine, to get Ukraine the firepower that it needs to rapidly regain its territory.

Tobias Ellwood: I thank the Minister for his statement.
Mr Speaker, may I begin with a declaration of interest that is pertinent to this subject? I am a dual US national born in the USA and I hold a US passport. I have grown up increasingly appreciating the value and, indeed, the importance of the unique and incredible bond that we have with our most trusted and valued security ally. However, when a security leak of this magnitude takes place, it should not prevent the legislatures on both sides of the Atlantic from seeking assurances—such as the Minister is giving us today—about the fall-out from the scale of top secret information that is now in the public domain and from the changes that may be considered to significantly limit the chances such an event being repeated. I ask the Minister not to hide behind that general veneer of secrecy here, but to be frank with the House about the process. Mass data are accumulated from a multitude of sources. This is then summarised to provide relevant information, and analysis of that  information forms the intelligence picture. That is then presented to decision makers, and can then lead to action that might limit or alter the behaviour of an adversary to close down a threat or indeed inform and persuade other nations to join our cause.
I am pleased to hear that the Minister and the Secretary of State are speaking with their counterparts, but does the Minister believe that too many eyes now have general access to sensitive intelligence, with the pendulum of sharing files swinging too far after 9/11? Is there now too much information—almost by default—now classified as top secret? For example, if Egypt is intending to supply missiles to Russia, surely the world should know about that. If a Russian Su-27 jet did deliberately attempt to fire a missile at an RAF Rivet Joint over the Black sea last September, it was an act of war, and the details should surely be publicised, not hidden away in intelligence files. We certainly must avoid another Daniel Ellsberg situation.
As the world enters a dangerous chapter, we slide, potentially, into another cold war. The parameters for sharing and acting on pooled intelligence must surely be overhauled, so that they are fit for purpose. America, is our closest security ally, absolutely, but if a vital aspect of our relationship requires reviewing or addressing, surely we should have the confidence to do just that.

James Heappey: As my right hon. Friend notes, the apparently leaked documents are in the public domain. However, that does not change their classification and thus the degree to which any UK Minister or official can comment on their content, so I will not be commenting on specifics of the examples he raised, nor any others over the course of this urgent question. He is absolutely right in setting out the process by which information is gathered, assimilated and presented to decision makers; he is absolutely right that the breadth and scale of information in this data age is enormous; and he is absolutely right that one of the key decisions that any organisation with intelligence at its core has to make is how to allow access to that information so that the relevant people can use it to make good decisions.
My right hon. Friend asserts that perhaps too many eyes now have access to that information. I think that is a matter for different Departments in different countries to consider. As you would imagine, Mr Speaker, the MOD has looked at our own processes as a consequence of what happened last week. We have to place huge trust in our vetting processes to ensure that those who routinely have access to classified information have been risk-managed appropriately. Even beyond that, within the vetted workforce there is a very necessary compartmentalisation of information, so that only those who need to see things to do their jobs see them.
That said, what we are learning in the information age, when it is about getting ahead of the other side’s narrative, is that it is very useful to be able to think quickly about the information we have. There is thus a balance to strike between being overly compartmentalised and being in a position where people can be well informed and quickly make decisions in a way that meets the speed of relevance in modern competition. Suffice to say, and I hope my right hon. Friend and the House will be reassured, that of course the permanent secretary, on seeing what happened in the Department of Defence  last week, has had a good look at what is going on inside the MOD to make sure that, if we have any lessons to learn, we do so.

John Healey: The US is our closest security ally, so this is of serious concern. The intelligence we share bilaterally and through alliances such as NATO and Five Eyes is fundamental to our UK national security, and it is essential that that continues confidently and confidentially. The Secretary of State for Defence is in Washington, we are told, apparently to discuss this breach, but will he make a statement to Parliament on his return to confirm the reassurances he has received on how British intelligence is handled?
The Minister is right to say that the US agencies are treating this seriously. The Pentagon says that it expects findings from its investigations within 45 days. Two years ago, UK classified documents on Challenger 2 tanks were similarly reported leaked from an online forum for video gaming, “War Thunder”. What action was taken following that leak?
I have a number of questions that the Minister has not yet answered. He has described the documents as inaccurate, but to what extent have they been manipulated and to what extent have they been used as disinformation? Has this leak put at risk any UK personnel? Is the MOD mitigating such risks, and if so how? This is the time when the UK should be accelerating military support to Ukraine, so what assessment have the Government made of the impact of this leak on Ukrainian plans for a potential offensive?
While threats to the UK continue to rise, security breaches have been getting worse on the Defence Secretary’s watch, with 2,000 people affected by data breaches set out in the last MOD annual report and a 40% increase in the number of referrals to the Information Commissioner—and that was last July. How many MOD data breaches have occurred since? Finally, why is no Minister designated as responsible for information security when handling intelligence is so critical to our national security?

James Heappey: First, I thought I was clear in my initial answer that the Secretary of State is in Washington for a briefing to the House Foreign Affairs Committee that was requested in December and scheduled in January. It is fortuitous that he is there to discuss these matters in addition, but it would be inaccurate to say that he is there because of what happened last week.
The right hon. Member for Wentworth and Dearne (John Healey) asks about previous incidents where the UK MOD has been responsible for leaks. I agree with him that it happens too often, but every time it happens, reviews are put in place and lessons are learned in terms of both the way that information is handled digitally and—because this was the case last year—the way that documents are removed from the building. On the former, there has been a wide-ranging and robust effort to assure the digital security of documents and to ensure that all users of secret and above systems are aware of the way that those systems should properly be used, and of how it should not even be attempted to move information from one system to the other. On physical documents, the Secretary of State put in place   random bag searches at MOD main building immediately following the leak of hard documents last year, and those searches remain in place now.
The right hon. Gentleman is absolutely right to observe that some of those documents have, since their apparent leaking, apparently been manipulated for various misinformation and disinformation purposes. That is why it is important to qualify that colleagues should be suspicious not only of the original content, but of the different versions that are in circulation subsequently, because they have been manipulated for various means. He is of course right to flag his concern, which mirrors our concern, about any force protection implications from such leaks. That was indeed our first concern, and the chief of joint operations was able quickly to reassure us that all those involved in the protection of diplomatic mission in Ukraine are not compromised in any way by the leaks—nor are any of those involved in the wider support for Ukraine and the wider continent beyond.
I do not think that there is any impact on the Ukrainian plans for the offensive. In fact, as the right hon. Gentleman will have seen in the reporting of those, there has been a degree of amplification from the Ukrainians around some of the casualty statistics—I make no comment on the accuracy of the figures being pumped. Indeed, there is reporting that those figures have been manipulated by both sides to tell their story. But I am pretty confident that the Ukrainians are intending to stick to their plan and go for it. I do not have the information today on precisely how many breaches there have been, but I will write to him.

Julian Lewis: I do not wish to be disobliging to my right hon. Friend the Member for Bournemouth East (Mr Ellwood), who succeeded me as Chairman of the Defence Committee, but I feel it necessary to ask the Minister to clarify beyond any doubt or confusion that matters relating to defence intelligence—like those relating to the intelligence roles of other Departments—do not fall within the ambit of the departmental Select Committee, but should, and rightly do, fall within the ambit of the Intelligence and Security Committee. My right hon. Friend was courteous enough to let me know that he had been granted this urgent question after it had been granted. Had he asked before applying, I would have advised him, first, that it was not within the remit of the Defence Committee to seek information on this matter, and secondly, as the Minister’s replies have indicated, that it would be very unwise, particularly at this early stage, to discuss the implications of such a leak in public. Will the Minister confirm that, in any future questions and answers about defence intelligence, he will address his answers to the appropriate Committee, which is the Intelligence and Security Committee?

Lindsay Hoyle: May I just help a little bit? I granted the UQ not because the right hon. Member for Bournemouth East (Mr Ellwood) is the Chairman of the Defence Committee, but because I thought it was appropriate, so we do not need to level it in that way.

James Heappey: Thank you very much indeed, Mr Speaker; I value the friendship and counsel of both the current and the previous Select Committee Chair, so I think that you have said it all.

Lindsay Hoyle: I call the SNP spokesperson.

Owen Thompson: I will be equally brief. There are clearly serious issues to consider here, and it is very important that we avoid speculation, particularly because, as I understand it, this case is sub judice in the US. No doubt our intelligence community is working hard with its partners to review the implications and will report to the ISC. I do not want to prejudge anything, but to echo the comments of the right hon. Member for New Forest East (Sir Julian Lewis), can the Minister confirm that he will work closely with the ISC to ensure that we are fully able to consider any outcomes of this investigation?

James Heappey: I note the concern of the hon. Gentleman and of my right hon. Friend the Member for New Forest East, the Chairman of the Intelligence and Security Committee. We will ensure that any matters that can be exposed to them relating to this are exposed.

Theresa Villiers: The whole House should welcome the great seriousness with which this is being taken by our Government and the Government of the United States. It is important for us to acknowledge that mass leaks of this kind are unjustified and serve only to help the interests of those terrorist groups and hostile states that wish us harm.

James Heappey: My right hon. Friend is absolutely right: these leaks, as unfortunate as they are, only benefit one group of people, and that is our competitors and adversaries in the world who mean us harm. Whatever heroic intentions those responsible for these leaks may think they have, they are wrong. They risk the safety of our armed forces, and they compromise the work that we and our allies are doing around the world to stand up to the challenge to the rules-based international order that we so strongly believe in.

Kevan Jones: I thank the Minister for his statement, and I concur with his views about the close relationship that we rely on with not just the United States but our other Five Eyes partners. The Intelligence and Security Committee has not yet met to discuss this issue, and it is the only Committee of Parliament that will be able to look at the classification of material that is covered. It is right not to make any pre-emptive statements about what has been in the press, but if we do decide that we wish to look at this—and there is a good chance that we will—can he confirm that we will get full co-operation from not only Defence Intelligence but other intelligence agencies in pursuing the rightful questions that we, uniquely, can ask in the closed environment in which we meet?

James Heappey: In the interests of not only expectation management but accuracy, I will say to the right hon. Gentleman that I will ensure we do all that we are allowed to do and that the Committee is serviced with whatever is releasable, accepting, of course, that the content that has been leaked is US content, which might mean that that is very difficult for us to do.

Sarah Atherton: We know that Russia is a master of propagating disinformation, and this is an evolving tactic increasingly used by hostile states, so can the Minister assure us that this issue is being considered in the Defence Command Paper refresh?

James Heappey: I certainly can. A very important theme we have learned over the last year is that the way in which we own the narrative and counter disinformation is almost every bit as important as the physical reality of the battle on the ground, so this is an important part of our work on the Command Paper refresh.

Dan Jarvis: The leak in the US should be, and I am sure is, focusing the Minister’s mind on the importance of our own information security. To that end, can he give an assurance that all information and data relating to our own armed forces personnel that is held by private sector contractors—particularly those that are foreign-owned—is secure?

James Heappey: I would fully expect it to be, but perhaps I can take the hon. Gentleman’s question away, ask it of the Department and write to him, so that we can both have confidence that my expectation is well founded.

Rehman Chishti: The Minister will know that a number of years ago, the diptels of our brilliant former ambassador to the United States were leaked, which had real ramifications for our relationship with the United States and the issue of secret documents being shared within Government Departments. Were any specific lessons learned from that incident at the Foreign Office with regard to how our brilliant former ambassador was treated in doing his job and to the leak of secret documents? Does the Minister have a view on the point raised by my right hon. Friend the Member for Bournemouth East (Mr Ellwood) about restricting the number of individuals who see these documents?

James Heappey: As the shadow Secretary of State, the right hon. Member for Wentworth and Dearne (John Healey), set out, there have been occasions when we reside in a glass house on these matters, so I am reluctant to throw stones at any other Department.

Richard Foord: The Minister is right that we must be careful with leaked US documents that may turn out to be misinformation or disinformation, but they do appear to reveal that the UK Rivet Joint aircraft was subject to a near miss. If the Secretary of State had assessed that the Rivet Joint aircraft had been intentionally fired upon, would he have shared that Ministry of Defence assessment with the House?

James Heappey: The Secretary of State has briefed the House on that incident. I am not going to offer any discussion on the version of events that was put across in the leak.

John Cryer: The main short-term worry on both sides of the House is that this leak might compromise the much-vaunted spring offensive, which may be the most crucial move in the effort to repel Putin. On that basis, will the Secretary of State undertake to appear before the ISC as soon as there is anything substantive to report?

James Heappey: There are two separate issues there. The first is what the impact of this leak may or may not be on the Ukrainian spring offensive. The shadow Secretary of State asked whether I thought it would have any  consequence for that. I do not. I think the Ukrainians will proceed with their plan as it is, and I have every confidence that they will be successful. The international effort to resource their plan is extraordinary, and the plan is coming together very well indeed.
The second is whether any matters relating to the spring offensive and these leaks should be briefed to the ISC. As I have said, the difficulty is that this is not our information to brief, nor is it a leak from the UK MOD. While I have undertaken to a number of colleagues who are on that Committee to ensure that we share what we can with the Committee, I have to be very clear that it is not our information to share, nor was it our leak, and thus I suspect that we are rather limited in what we can say and do with the Committee on this matter.

Gavin Robinson: I thank the Minister for his response and recognise that the hallmark of the last 12 months has been the MOD’s willingness to publish defence intelligence reports and give decision makers and legislators the information we need to identify disinformation and guard against false flags. I welcome the indication he has given that a review is under way by the permanent secretary of processes to ensure that information and intelligence in particular is retained as it should be within the Department. Will he undertake to update the House when the review is complete, whether through an oral statement or written ministerial statement, recognising that the detail contained in that review would be more appropriate for the Intelligence and Security Committee?

James Heappey: I am happy to make that undertaking. As we conclude our internal reviews, we will make sure that if there is further information to offer to the House, we do so. Similarly, I have made a number of commitments to offer assurance through written answers, and we will make sure that those are shared with the Library.

Toby Perkins: The arrest of a fairly junior 21-year-old National Guardsman in relation to this leak begs the question of who has access to top secret information. Pentagon officials say that thousands, if not tens of thousands, of people would see this kind of document. The Minister is right to say that it is a matter for the Americans who has access to their documents, but on the basis of this worrying development, what reassurance can he give us about the level of seniority that British information shared with the Americans goes to?

James Heappey: We certainly draw no boundaries based on seniority around the information that is shared bilaterally—UK-US—or within the Five Eyes, NATO or elsewhere. Information flows to where it is needed. An analyst who is the expert on a particular Russian capability might be a relatively junior non-commissioned officer, but they might be the best in the world at that area of expertise, so rank is probably not the right boundary to set.
But what we are very careful about—I think the United States and other Five Eyes partners are similarly clear about this—is that information goes to where it is needed, not where it is necessarily wanted. That level of compartmentalisation gives enormous assurance. Leaks  such as this one are exceptional, rather than the norm, and it is important that we put this—no matter how grave it appears to be—in the context of the vast amount of information that is shared between the UK and the US and within the Five Eyes routinely, and which is never, ever seen by any eyes other than those for which it was intended.

Catherine West: There are clearly issues with the process of vetting individuals. What reassurances can the Minister give? He says lessons are being learned, but does something not ring a bell on the vetting problems we have seen in UK policing? What can be done holistically to look at the vetting of individuals who have access to information held by the state and to top-secret processes?

James Heappey: I looked anxiously for reassurance from the Policing Minister, my right hon. Friend the Member for Croydon South (Chris Philp), but my sense is that the police vetting to which the hon. Lady refers is a background and character check for a person’s initial employment, and therefore somewhat different from the developed vetting process that is used within Government—and particularly within the MOD and the security agencies—to assure access to top-secret and compartmental information. That process is extraordinarily rigorous, involving in-depth background checks that go back a number of generations, plus interviews and other evidence gathering that allows us a relatively high level of assurance about the people with whom we share information. The exact process is perhaps not something that should be set out in public, but it is one in which I and other ministerial colleagues have great confidence.

Martin Docherty: A somewhat overlooked revelation from these documents was that not only were the United Arab Emirates and Russia co-operating on evading international sanctions, but—I quote the Associated Press report—
“In mid-January, FSB officials claimed UAE security service officials and Russia had agreed to work together against US and UK Intelligence agencies, according to newly acquired signals intelligence.”
Despite that knowledge, the Government continue to facilitate military, security and economic exchanges with authoritarian Gulf states, and encourage them to make massive investments in infrastructure across these islands. So I ask the Minister this: after the Russia report, have this Government learnt nothing about the cost of doing business with authoritarian regimes, or will they just continue to be the frog that thinks it can ride the back of the scorpion?

James Heappey: The hon. Gentleman, in a style with which I am now familiar, comes left and right-flanking and down the centre all at once, but at the heart of the question was an invitation to reflect on some of the content of the leaks. As I have been very clear, I am not going to do so.

Margaret Ferrier: We know that leaks of secret and top-secret military information put lives at risk. At what point were soldiers on the ground made aware of the breach, and what support has been put in place, practically for them as well as emotionally for their families at home?

James Heappey: The troops on the ground—those involved in the protection of the diplomatic mission in Kyiv—will likely have been aware of it as it broke in the news. It is not for them to worry about their force protection beyond the tactical measures they can take locally; that is a matter for the permanent joint headquarters, and the chief of joint operations was quick to assess what the implications may be for their force protection. He concluded that there were none and that the mission can safely continue. The amazing thing about the men and women who serve in our nation’s uniform is that their instinct is to carry on with the mission at hand, not necessarily to worry for their safety. We are very lucky that that is the way they approach these things.

Machetes: Consultation

Lindsay Hoyle: Before we come to today’s statement, I remind all Members that they should not refer to cases that are before the courts. That includes ongoing inquests and criminal cases where offenders have not yet been sentenced.

Chris Philp: With permission, Mr Speaker, I will make a statement on legislative proposals to tackle the use of machetes and other large knives in crime.
Knife crime causes misery and fear in our communities, which is why over many years this Government have taken concerted action to tackle it. We are pursuing a twin-track approach, combining tough enforcement with prevention and intervention as we relentlessly bear down on violent crime, and we are supporting the police every step of the way in that effort. We have given forces more powers and more resources to go after criminals and take knives and dangerous weapons off our streets, and we have legislated over time to tighten the law.
The results are clear to see. Since 2019, the police have removed over 90,000 knives and dangerous weapons through stop and search, surrender programmes and other targeted police action. Violence, as measured by the crime survey, is down by 38% since 2010, and hospital admissions as a result of injuries caused by a bladed article and where the victim is below the age of 25 are down by 24% since 2019. This is really important work: every knife or weapon taken off the streets has the potential to save lives. We have also invested significantly in violence reduction units to bring together agencies to tackle the drivers of serious violence at a local level. We have introduced Grip—hotspot policing to tackle enforcement in areas with particular problems—and have established the £200 million Youth Endowment Fund to fund innovative diversionary activities.
The combination of violence reduction units and targeted hotspot policing has prevented an estimated 136,000 violent offences in the first three years of funded delivery, and tomorrow we will launch a pilot of serious violence reduction orders to give the police an automatic right to stop and search convicted knife offenders. Every offender issued with an SVRO will face an increased likelihood of being stopped by the police and, if they persist in carrying weapons, will be sent back to prison or brought before the courts. That follows the start of the offensive weapons homicide review pilot on 1 April, which will see local partners work together to review the circumstances of certain homicides where the death of a person aged over 18 is likely to have involved the use of an offensive weapon.
Through our police uplift programme, of course, we are recruiting thousands more officers—we will get the figures next week, but we confidently expect those to confirm that we have record numbers of police officers in England and Wales. That is something that I am sure Members across the House will welcome very strongly, along with the 38% reduction in violence since 2010.
However, as the public would expect, we keep our approach under constant review, and where improvements can be made, we will not hesitate to act. It is in that context that we have today launched a seven-week  consultation on new proposals to go even further to tackle the use of certain machetes and other bladed articles in crime.
The UK already has some of the strictest knife legislation in the world, and the police already have broad powers to tackle knife crime. Our new proposals to go even further have been developed in co-operation with the National Police Chiefs’ Council knife crime lead, but also in consultation with Members of this House who have brought forward constituency cases illustrating the need to go further.
I pay particular tribute to my hon. Friend the Member for Southend West (Anna Firth), who brought forward an example of a knife that was legal that was used in an offence in Southend. That knife will be illegal once these changes are made. I also pay tribute to my hon. Friend the Member for Walsall North (Eddie Hughes)—I see him in his place—who also highlighted constituency cases of knife crime. Finally, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) raised the case of one of his constituents, who was robbed using a machete in broad daylight on the streets of Chelsea. I thank those Members and others for bringing these issues to the attention of the Home Office, and it is in response to their constructive campaigning and to the police that we are taking even further action today.
We have identified certain types of machetes and large outdoor knives that do not appear to have a practical use and appear to be designed to look menacing and to be favoured by those who want to use knives as weapons. We intend to ban those weapons, going further than the weapons ban already introduced in the Offensive Weapons Act 2019, particularly under section 47, with which I am sure Opposition Members are familiar. That means it will be an offence to import, manufacture, sell or supply any of these weapons. We also believe that the criminal justice system should treat carrying prohibited knives and offensive weapons in public more seriously, to better reflect the severity of the offences, and we are consulting on that point.
In addition, we are proposing to toughen the current penalties for selling prohibited offensive weapons and for selling bladed articles to under-18s. Under our proposals, the maximum penalty for those offences would be increased to two years’ imprisonment. We are also consulting on whether to provide the police with additional powers to enable them to seize, retain and destroy bladed articles of any length held in private where they are intended for criminal use, or whether the powers should be limited to articles of a certain length. We consider that to be a proportionate response. When discussing it this morning in Brixton police station with the National Police Chiefs’ Council lead, they certainly strongly welcomed those additional powers.
Finally, we are consulting on whether it would be appropriate to mirror firearms legislation and introduce a separate offence of possessing a knife or offensive weapon with intent to injure or cause fear of violence, with a maximum penalty higher than the current offence of straight possession. In addition to publication on gov.uk, I will place in the Library copies of the consultation document and the accompanying impact assessment, and I encourage Members on both sides to respond to that.
Knife crime is a menace that has no place in society. It can destroy families and leave lives devastated. We have shown time and again that this Government will  always put the interests of the law-abiding majority and victims first. We have given our police forces more officers, we have given them more powers, and now we are seeking to go even further. We are relentlessly focused on driving down crime, and I trust that Members on both sides of the House will support these measures.

Lindsay Hoyle: Order. Can I just say to the Minister that the copy of his statement that I have does not relate to what he was saying to the House? Some part seems to be missing.

Chris Philp: Of the statement?

Lindsay Hoyle: Yes, of your statement. I do not know whether you have been ad-libbing.

Chris Philp: There were one or two points I added in reference to Members here, but in substance no. I am happy to try to work out what happened afterwards.

Lindsay Hoyle: Normally, I see a full copy. I was looking to where we had got to, and then we picked up somewhere else. I think it is important that we try to keep as near as possible to the script that we expect the House to reflect on. I just make that point. I have had it before, and it is easier, especially when the Opposition are going to reply, if things are there. When you go off script for a while, we do wonder what is coming next. I call the shadow Minister.

Sarah Jones: The additional extracts were not in my copy of the statement either. Labour supports measures to ban zombie-style knives and machetes. Knife crime devastates lives and rips families apart, but this is too little, too late—a smokescreen to distract from the Government’s appalling record. Knife crime has risen across the country by 70% since 2015, and the whole country is affected. Since 2011, knife crime has doubled in Lincolnshire, Hertfordshire and Derbyshire. It has trebled in Norfolk, Essex and Sussex, and in Surrey it has risen tenfold. There are serious problems in Swindon, Milton Keynes and Rochdale. With a serious violence strategy that is five years out of date, the Government do not have a plan to tackle knife crime in our towns and suburbs.
The Offensive Weapons Act 2019 was hailed by the then Prime Minister as the big answer to what is a national crisis, but it has not worked. A year and a half ago, I called on the Government to act on getting these knives off the streets entirely, but they have done nothing. Why the delay? We have heard it all before. In 2016, the former Home Secretary pledged a ban on zombie knives. In 2017, the next former Home Secretary pledged another ban on zombie knives. In 2018, the then new Home Secretary pledged another ban. In 2021, the Home Secretary after that promised yet again to ban zombie knives. Now, déjà vu, we are promised yet another ban. The Home Secretary says today that it cannot go on, but it has and it is; it is going on and on. Who on earth do they think has been in power for the past 13 years?
This is personal for me. Just last month, I sat with a grieving mother in Rochdale, traumatised after the murder of her little boy. I have seen the destruction that knife crime causes with my own eyes, and it is getting worse.  Total knife crime is up 11% in the past year alone. Knife-enabled rape and knife-enabled threats to kill are at record levels. Knife possession is up 15% on pre-pandemic levels. The Minister said that violent crime is down, but serious violence is up, not down, and that should be his priority.
The proposed ban does not go far enough. It is already an offence to sell knives to under-18s, but the Government have utterly failed to enforce the law. Just last year, a boy was murdered in east London with a knife bought with fake ID. After the Minister’s changes in the consultation, will I still be able to buy a 49-cm sword online? Only swords over 50 cm are banned. Will I still be able to purchase the 40-inch samurai sword for £100 or the 16-inch “Deluxe Rambo First Blood” knife for £40 that I found this morning on knifewarehouse.co.uk? The consultation does not seem to include any of those.
The Government are trying to legislate their way out of a problem caused by their cuts to police—cuts that have left us with 10,000 fewer neighbourhood police and police community support officers on our streets since 2015—and cuts to everywhere from mental health to youth work. Does the Minister think it is okay that adults can buy dangerous banned knives on online marketplaces that come from abroad? There is nothing today to tackle that, and the online harms Bill will not stop that. Does he think that tech execs should be responsible for what is on their sites? Apparently not, because his party opposed Labour’s plans to make technology execs criminally responsible when they consistently fail to remove illegal content. Does he think it is acceptable that knife seizures have collapsed at the border? Why is the serious violence strategy now five years out of date? Why are the Government failing to prevent young people from being drawn into crime in the first place, opposing Labour’s plans to outlaw the criminal exploitation of children and cutting a billion pounds from our youth services?
Is it any wonder that the public have lost faith in this tired Government, who are weak on crime and weak on the causes of crime? The next Labour Government will take action, making it our mission to halve knife crime within 10 years. Labour is the party of law and order now.

Chris Philp: I certainly admire the shadow Minister’s sense of humour. Let me pick up some of the points she made. She asked about police numbers. As I have said, the figures that will be released on the 26th will show, I am confident, that we have more police officers than at any time in our country’s history, including more police officers than at any point in the time in office of the last Labour Government.
The shadow Minister asked about crime figures. I will repeat the point I made before: only one dataset is considered reliable by the Office for National Statistics and that is the crime survey of England and Wales. It shows that, since 2010, violent offending has dropped by 38%, criminal damage is down 62%, burglary is down 56%, robbery is down 55% and overall crime, excluding fraud and computer misuse, is down 30%. When will the shadow Home Secretary, who was a Minister in that Government, apologise for the fact that crime was double the level it is now under this Government?
The shadow Minister asked about the changes we are making today. This Government have been progressively tightening the legislation over the years, including the Offensive Weapons Act 2019. We have been continuously reviewing that legislation. Where we find opportunities to make it stronger and more effective in response to Members of the House and the police, we will take those opportunities, and that is what we are now doing. If there are some specific comments on the length of knives, that is exactly what the consultation is designed to capture. I strongly urge the shadow Minister to respond to the consultation. I look forward to receiving the extremely considered and detailed submission that she is no doubt working on already.
Finally, in relation to recent trends in the data, the most reliable source of information on serious violence is hospital admissions where the victim has received a knife wound. Over the past three years, for victims under the age of 25, those have reduced by 24%. There is a lot more to do, but the direction of travel is clearly right and this Government are committed to going even further.

Mark Francois: If I can make a non-partisan point for a moment, the whole House knows that our late friend and colleague Sir David Amess was murdered with a bladed weapon, so I would like to pay tribute to his proactive successor, my hon. Friend the Member for Southend West (Anna Firth), for campaigning on this issue, evidently with some success. Can the Minister assure us that, on so-called zombie knives—many of which are now purchased online and some of which, I understand, we can only ban because of what is written on them, rather than what they can do—this new legislation will materially restrict the ability, and ideally end it, for people to buy those weapons online, either domestically or from abroad?

Chris Philp: My right hon. Friend makes a very good point and is right to remind the House of our much-loved former colleague Sir David’s tragic death at the hands of a knife-wielding attacker. He asks two questions. First, yes, I can confirm that zombie knives that do not have any writing on them will be covered by the proposals. Sub-paragraph (iii) in section 47(2) of the Offensive Weapons Act 2019 has a requirement that there are threatening words on the blade, and we have reached the conclusion that that is unduly restrictive. It is not something that anyone, including the Opposition, complained about at the time the Bill passed, but on further reflection and following input from colleagues, such as my hon. Friend the Member for Southend West, we think that that change needs to be made, and I can confirm that it will be.
In relation to my right hon. Friend’s question, and the shadow Minister’s question, about sales online, people directly selling online prohibited items is obviously just straight-up illegal. In relation to selling on marketplaces, following discussions with colleagues in the new Department for Science, Innovation and Technology, I have been assured that the Online Safety Bill will cover online marketplaces when it comes to selling items like this, so with the passage of the Online Safety Bill, the kind of provisions he is asking for will apply.

Rosie Winterton: I call the Chair of the Home Affairs Committee.

Diana R. Johnson: I know that there is widespread concern about this issue on both sides of the House. In 2019, the Home Affairs Committee published a report on serious youth violence, following a 70% rise in knife crime over five years. The Home Office had failed to give the Committee at that time any assessment of how many young people were at risk of being involved in knife crime. The Committee called on the Government to treat this as a social emergency and warned them that the serious violence strategy was inadequate. Four previous Home Secretaries have made announcements in response to knife crime. I wonder if the Minister could set out why he thinks those approaches have not been effective. What is different about the approach that he has announced today and will that be effective?

Chris Philp: I thank the Select Committee Chair for her question. I do not accept that the previous initiatives have been unsuccessful. I have already pointed to the steady reduction in hospital admissions as a result of knife wounds and the steady reduction in violent offences, as measured by the crime survey for England and Wales. The Government have successively tightened the law and we are tightening it further today. We have also put more and more resources successively into tackling the social problem that the Select Committee Chair rightly highlights. For example, the violence reduction units are now putting a great deal of money into the 20 police force areas where violent crime is most serious. The Youth Endowment Fund has £200 million to spend on targeted, evidence-based interventions to help young people into a better future. I have visited some of the programmes that have been run—by Everton football club in Merseyside, to give one example. I was in Brixton in south London earlier today, hearing about the community work that happens there. I think the process we are following is successively increasing resources, investing in diversionary activities for young people and successively strengthening the law where evidence emerges that that is necessary. It is over time yielding results; I set out the data at the beginning of my answer.

James Daly: Following a recent meeting with my local chief superintendent, he set out that it is a matter of course for many young people in Bury to carry a knife. I will just state that fact again: it is a matter of course for young people to carry a knife. The excuse, when they are stopped, is that it is for self-defence purposes. What happens then? The police take the knife, but there is no prosecution. The problem, and we always do this in this House, is that we talk about words on a piece of paper. Unless the police actually prosecute and take action against people for possession of weapons, this problem will never be sorted out. It could be any type of knife that you want. Does the Minister agree that we have to have an approach from the police where there is no nonsense and no taking a knife—people are prosecuted and put in front of a court if they have a knife, end of story?

Chris Philp: I agree with my hon. Friend. The laws we pass here, whether on this topic or on any other, are only meaningful to the extent that they are properly enforced. It is my view, as it is his, that when the police arrest somebody in possession of a knife, they should follow up. There should be a prosecution and, where  appropriate, there should be custody as well, or there should be rehabilitative work, where that is appropriate, as well. So I entirely agree with him. With the extra resources and extra officers the police are getting, they have the bandwidth now to do that. Our expectation across this House—on both sides—and certainly in the Home Office is that the police do do that.

Pat McFadden: Knife crime is taking a devastating toll on our communities, with young lives cut short and families torn apart and living with the heartbreak for the rest of their lives. Last year, my constituent Ronan Kanda was killed in a knife attack just yards from his own front door. Ronan was only 16. He had his whole life in front of him. His mum Pooja, his sister Nikita and his wider family miss him every day; I spent time with the family on Friday evening. Can I urge the Minister to bring in this ban on the sale of machetes and similar knives as soon as possible, as one step towards tackling knife crime and trying to ensure that fewer families have to face the grief felt by the Kanda family over the loss of Ronan and the many other families carrying a similar burden of grief?

Chris Philp: I thank the right hon. Gentleman for his moving and powerful description of the awful tragedy that has affected the family of his constituent. The way he described that incident illustrates powerfully to the whole House why it is so important that all of us work to eradicate the scourge of knife crime. Yes, I can give him the commitment he asked for: we will proceed as quickly as we possibly can. Some of the proposals can be done in secondary legislation. We will do that as quickly as we can following the conclusion of the seven-week consultation—it is quite a short consultation, because we want to get on with this. Where primary legislation is needed, we will aim to do that as quickly as we can in the following Session, so, yes, I can give him that assurance.

Anna Firth: I am absolutely delighted to hear this announcement today, because machetes and knives have been used in my constituency with tragic consequences, quite apart from what happened to Sir David. The devil is always in the detail. I am delighted to hear that we are going to consider tightening up the definition of zombie knives, which is obviously needed. I am also delighted to hear that, once they are prohibited, their importation, manufacture and sale will be illegal. But reckless retailers are expert at circumventing the law and that is what has happened here. So could I urge the Minister to consider going even further and having a licensing scheme for machetes in this country similar to gun licences? There are some legitimate uses for machetes, but not many. That way, at least we could make sure we get every machete off the streets and out of homes, and prevent these appalling crimes and tragedies.

Chris Philp: Can I start by paying tribute again to my hon. Friend for her tireless and very effective campaigning on this topic? This issue is a good example of Members of Parliament raising constituency issues that have led to what I hope will very shortly be a change in the law. In relation to retailers, we intend to be very strict with retailers. The ban will apply to machetes where there is no obvious legitimate purpose, and retailers will be committing a criminal offence if they sell them. We  should have no tolerance at all, as she says, for any retailer who seeks to circumvent or break the law by selling machetes that are—that will be—banned.

Marsha de Cordova: Machetes and zombie knives should have been banned a long time ago, given that the Government had committed on multiple occasions to banning them, but 13 years of cuts to youth services has led to a number of those services closing across the country, including in my constituency, and it is a fact that areas suffering from the largest cuts in spending on young people have seen the biggest increases in knife crime. For all the talk about prevention and intervention, why will this Government not commit to investing in more resources for young people alongside banning these weapons?

Chris Philp: On the first point regarding existing legislation, certain kinds of zombie knives were banned under the Offensive Weapons Act 2019, but as I said earlier, sub-paragraph (iii) in section 47(2) of the Offensive Weapons Act 2019 banned only zombie knives that have threatening writing on them, and we are now filling that gap in response to feedback.
On the second point about youth services, I agree that prevention is a critical part of the strategy—it is not just about enforcement; it is about prevention as well, and that includes providing alternatives for young people. That is why we have set up the Youth Endowment Fund, with £200 million to fund evidence-based activity, and it is why violence reduction units and project Grip programmes are directing funding at the 20 police forces, including the Metropolitan police, where those services are most desperately needed.

Eddie Hughes: I pay tribute to Pete Madeley and the Express and Star newspaper for their campaign on this issue and for articulating the concerns of their readership. Does the Minister share my surprise that the Labour police and crime commissioner seems to have made little or no attempt to engage with the public in Walsall following some dreadful knife crime recently?

Chris Philp: I thank my hon. Friend for his tireless campaigning on this issue, and his local paper which I know has been raising it as well. I am sorry to hear what he says about the Labour PCC in the west midlands. I urge all PCCs to engage with their local communities and I am particularly shocked and concerned to hear that the west midlands PCC is apparently considering closing down 20 police stations.

Alistair Carmichael: I welcome the relative novelty of a Home Office statement, instead of Home Office Ministers having to be brought to the Chamber to answer an urgent question. If this statement is a yardstick by which statements can be expected, the House will be better served in the future than it has been in the recent past.
The measures in the consultation are eminently sensible, and I do not think there would be any challenge from Members in any part of the House, but the Minister is kidding himself if he thinks that this process is going to  shift the dial at all in reducing violent knife crime. What would make a difference is visible police presence in our streets. It remains to be seen whether the Government have honoured their manifesto pledge on police numbers, but we already know that the number of police community support officers on our streets is down by 33%; when are the Government going to restore those numbers?

Chris Philp: I am glad the right hon. Gentleman likes the statement and I will try to provide further such statements in the future given that there is clearly an appetite for them from his side of the Chamber.
On moving the dial, there is clearly no one solution to a problem like knife crime—there is no silver bullet; no one measure will fix the problem in totality—but I do think that these proposals will move the needle. I saw a knife today in Brixton police station that is currently legal; it was a zombie knife without lettering on it and therefore does not fall within the scope of section 47 of the 2019 Act. It is legal today, but under these proposals it will be illegal, meaning people cannot sell it, market it, import it, manufacture it or even possess it in private. I spoke to the National Police Chiefs’ Council lead today about the totality of these measures and he was very clear that he thinks this will make a difference. It will not solve the problem on its own, but I think it will make a difference.
On police numbers, the figures will be unveiled at 9.30 on 26 April—next Wednesday—so the right hon. Gentleman will have to bear with me until then. However, I am very confident, as I have said once or twice already, that we will have record numbers of officers—more than we have ever had at any time in the history of policing in England and Wales.

Stephen Metcalfe: I do not wish to pre-empt the outcome of the consultation, but many of my constituents cannot comprehend how such dangerous weapons can be sold and end up in commonplace use on our streets. I recognise the challenges, but please will the Minister do whatever it takes to get these weapons off our streets, prosecute those who carry them regardless of whether or not they claim it is for self-defence, and go as far as possible to restrict, and preferably completely ban, their sale?

Chris Philp: My hon. Friend speaks words of great wisdom and I agree with every single one of them.

Hilary Benn: This is urgent. Last Sunday a 15-year-old boy was attacked with a machete in Leeds—he is being treated for a serious head injury—and the previous month a group of men had a fight with machetes in broad daylight on the streets of our city. I welcome these proposals and echo the call from my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) for them to be brought in as quickly as possible and the call from the hon. Member for Southend West (Anna Firth) for them to be made as comprehensive and loophole-free as possible, because there is no place for these weapons anywhere in our cities and towns.

Chris Philp: I agree completely with the right hon. Gentleman’s sentiments and those expressed previously by the right hon. Member for Wolverhampton South East (Mr McFadden). Speed is important: we want to do this as quickly as we can, and that is one reason it is a  seven-week consultation rather than longer. As I said earlier, we will take forward measures in secondary legislation as quickly as we can, and will also handle as quickly as possible those that need primary legislation.
I agree with the point about the need to avoid loopholes, and in that spirit I strongly encourage Members of this House and people outside it with an interest in this topic—whether charities or anyone else—to reply to the consultation on those points of detail. The shadow policing Minister, the hon. Member for Croydon Central (Sarah Jones) raised some questions about the length of particular knives; that is the kind of detail we need to get right and the consultation is the vehicle through which we can make sure the details are comprehensively captured exactly as the right hon. Member for Leeds Central (Hilary Benn) suggests.

Rehman Chishti: As in the constituencies of other Members, in 2018 we had a shocking incident in Gillingham in which an 18-year-old was killed by a gang using knives—the incident led to the tragic loss of the life of Kyle Yule. I met his family afterwards and said we would do everything we could to address the issue of knife crime, which brings me to asking the Minister where we go next.
In 2019, senior detectives in Newham said they had discussed with the Government a licensing or registration system due to fears that hunting knives were becoming the weapon of choice for gangs. That was in 2019 and we are now looking at new initiatives. Where are we with regard to licensing and registration? The Minister says we are looking at firearms legislation to see whether we need to move to that kind of system for the possession of knives. I was a lawyer and I prosecuted and defended many of these cases, and questions were raised then about licensing perhaps being specifically needed in this area. Are we there, and if not, why not?

Chris Philp: Some important steps were taken through the Offensive Weapons Act 2019. The Financial Secretary to the Treasury, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) is in the Chamber, and in a previous ministerial post she took that important legislation through the House. We propose to go further now: rather than introducing a licensing scheme, we propose to ban completely the machetes and zombie knives that are not currently illegal. Instead of requiring a licensing regime, it will simply be illegal to sell, market, import, manufacture or privately possess those particular knives.

Lyn Brown: I obviously welcome the further steps to crack down on dangerous knives whenever they might come in, but I gently say to the Minister that when I have taken evidence from experts on the knife problems in my constituency they tell me it is about poverty and child poverty; they tell me it is about the flourishing illegal drugs trade that we just do not have a handle on; they tell me it is about the exploitation of children by county lines gangs; and they talk about the lack of access to youth services and mental health treatment. I urge the Minister to look at this in a holistic way and begin to bring real change and real hope to communities like mine which are so blighted in this way.

Chris Philp: I recognise many of the causal factors the hon. Lady describes from her experience in West Ham. In Croydon, we see similar social problems that need to be addressed. Quite a lot of investment is now going into those areas. There is more money going into mental health. I mentioned already, in response to previous questions, the money going into the Youth Endowment Fund. The violence reduction units are designed to work with young people and get them on to a better path. I was talking to officers in Brixton in south London earlier today. They were telling me how they will use their extra officers. The sergeant from Lambeth talked about how they are going to try to work with families of young people as young as nine who are beginning to head down the wrong path. So, I agree that those are exactly the things we need to work on. Investment is being made and we are on the right path.

Louie French: I, too, welcome the news today that the Government are working to close legal loopholes on zombie knives and to strengthen police powers to help make our streets safer. My right hon. Friend will be aware that many of our constituents, in Croydon but also in Old Bexley and Sidcup, are very concerned about the rise in crime, in particular knife crime, under the Mayor of London. I therefore urge the Minister to review the calls from frontline police officers to look also at the introduction of scan and search as a way of helping to get knives off the street.

Chris Philp: My hon. Friend and fellow London MP asks a very good and pertinent question. The Metropolitan police currently takes between 350 and 400 knives off the streets of London every month using regular stop and search, so we should be clear that it is an important tactic that keeps our constituents and fellow citizens safe. Scan and search has enormous potential for covertly or discreetly scanning people as they walk down the street and detecting those who are carrying knives. I strongly encourage police forces up and down the country, not just the Metropolitan police, to adopt that kind of technology to ensure they identify more knives and take them off our streets.

Jon Trickett: An hour and a half ago, we were able to identify and source online a machete for under £11 which could be delivered to my house tomorrow. That is totally unacceptable. My constituents do not want to hear any more words; they want action. The Minister talked about diversionary tactics for young people. The 23 villages I represent tell me the Government have abandoned them: no youth services anymore; very little access to mental health services for young people; and very often we do not see any community police officers in our villages. None of that is acceptable. The issue requires a holistic approach by the Government to tackle the sense of abandonment that so many people feel in our area, which is the breeding ground for so much violent crime.

Chris Philp: One of the reasons we are hiring extra officers—and why we are confident we will have record numbers when the figures are unveiled next week—is to ensure we have a visible police presence not just in our cities and towns, but in villages up and down the country as well. In terms of action on buying zombie knives, the seven-week consultation launched today, combined with  the provisions in the Online Safety Bill, are designed to address that problem. It is important, as the hon. Gentleman says, and that is why the Government are acting.

Matt Vickers: Recently in Thornaby we have seen feral, balaclava-clad, knife-wielding yobs riding around residential areas on off-road bikes. On Saturday, someone was robbed at knife point in broad daylight. Does my right hon. Friend agree that we must encourage and back the police in the wider use of stop and search to get knives off our streets? Will he meet me to discuss the horrendous issues occurring in Thornaby?

Chris Philp: Yes, I absolutely agree that stop and search is a vital tool. I mentioned a few minutes ago that every month in London alone stop and search takes between 350 and 400 knives off our streets—knives that could be used to injure or even kill our fellow citizens—so I completely agree with that point. And yes, of course I would be delighted to meet my hon. Friend.

Chris Bryant: It is nearly three years since John Rees, then 88, left his wife in the car when he popped into Penygraig Co-op to pick up a few groceries. While he was in there, Zara Radcliffe tried to attack another person. He tried to intervene and was killed in the process. Of course, a knife was involved and it was the knife that killed him. But in the end, in a way, it is not the knife but the person who killed him. He was a phenomenal hero.
My anxiety is that if we deal only with more and more legislation and we do not deal with all the other issues, such as the mental health situation surrounding Zara Radcliffe or the problems with youth services up and down the country, we will not come to a solution. A point was made by a colleague of the Minister earlier that I think is really important: there is no point in passing lots more laws if we do not enforce them. He may not be able to answer this question now, and if he cannot I would be grateful if he wrote to me, but can he tell me how many prosecutions there have been since the 2019 Act in relation to possessing a knuckle duster, a throwing star or a zombie knife, or for that matter for the sale of a knife either in person or online without proper reason to someone under the age of 18?

Chris Philp: I am afraid I do not have the prosecution figures to hand, but I will certainly write to the hon. Gentleman with them. They are quite substantial. I agree with his general point that legislating is important but that, on its own, it is not enough. It is important that we legislate and that the police have the relevant powers, and it is important that we criminalise dangerous knives, as we are going to do, but we also need to ensure that there are enough police to enforce those laws, hence the police recruitment programme. It is important to have the right youth services, hence the Youth Endowment Fund and the violence reduction units that are being invested in, and the hotspot policing via the Grip programme, where the police identify particular hotspots and have surge policing in those areas. He is right that we need to do all those things. By comprehensively tackling this together, we can continue to make sure that the violent crime figures go down.

Taiwo Owatemi: As co-chair of the all-party parliamentary group on child criminal exploitation and knife crime, I welcome any announcement to tackle knife crime. As many have said today, adequate police numbers are important when tackling knife crime. In the west midlands, we have seen the highest incidence of knife crime of any police force area in the country, but we have had the lowest increase in police numbers since 2010. When will the Government start listening to my constituents in Coventry North West, invest in policing in the west midlands and make the necessary investments to start tackling the root causes of knife crime?

Chris Philp: I have talked a lot about the measures being taken to tackle the causes of knife crime: the Youth Endowment Fund, the violence reduction units and the Grip hotspot surge policing. I think the west midlands is one of the 20 forces that receives those interventions, as we would expect given the problems. On police numbers, I believe we will hit record numbers across England and Wales. There are some individual forces where police and crime commissioners have chosen, over the last five or 10 years, not to use their precept flexibility to raise more funds, and that does have a consequence. That is an issue the hon. Lady should raise with her local police and crime commissioner.

Clive Efford: I welcome the consultation. Let us hope it leads to urgent action. The Minister bandied around some figures to try to paint a rosy picture of crime rates, but what he failed to mention is that knife-enabled rape cases are at a record high and that, since 2015, knife-enabled crime is up 70%. I wonder if he thinks that has been assisted and aided by the fact that the Conservatives cut 21,000 police officers in that time, and whether that contributed to those rising figures? He says he may be crowing about the number of police officers next week, but where will they be allocated and will they be back on our streets in community policing, which the Conservatives decimated?

Chris Philp: Actually, the Metropolitan police already has record numbers. The most recent published figures show that it has roughly 35,000 police officers compared to a previous peak of 33,000, so the Met already has record numbers. From talking to the commissioner, Sir Mark Rowley, I know that he intends to place an emphasis on neighbourhood policing. In fact, earlier today a neighbourhood sergeant in Brixton, Lambeth confirmed that the neighbourhood policing units across the three wards he looks after have gone up already.

Steve McCabe: In his reply to my hon. Friend the Member for Croydon Central (Sarah Jones), the Minister cited the importance that he attaches to data from the Office for National Statistics. It reports that the number of people killed with a knife last year was the highest in 76 years. Did the Minister miss that statistic? How does that fit into his rather upbeat presentation?

Chris Philp: Overall, total homicide has gone down slightly over the last three years—by about 7%, speaking from memory. We should welcome that reduction. One of the reasons for legislating is that we are concerned that some of the very dangerous knives are being used in knife-enabled homicide, as the hon. Gentleman describes.  One of the issues with zombie knives is their double-serrated and jagged edges: if somebody is stabbed it causes serious internal injuries, which trauma surgeons and A&E consultants tell us are more likely to lead to serious injury or even death. Precisely for that reason, we are bringing forward these changes.

Andrew Slaughter: Is the Minister aware of the long-standing research by the University of Leicester on knife injuries, which found that carving knives are the most commonly used in stabbing incidents? A campaign was led by retired circuit judge Nic Madge, who has tried many knife offence cases. He said:
“my experience is that the vast majority of knives carried by teenage boys are ordinary kitchen knives.”
The campaign has made some practical recommendations such as only allowing the sale of large kitchen knives with rounded tips, to reduce serious injuries. Will the Minister engage with that work? What he announced today will make very little difference to the number of deaths and serious injuries on our streets, as perpetrators have other sources of knives available.

Chris Philp: As I said in my previous answer, the knives that we are talking about with serrated edges and jagged shapes tend to cause the worst injuries, because of the internal damage that they cause when somebody is stabbed with them. However, the hon. Gentleman makes some valid points, and I would be happy to engage with him and others to see if there are areas where we can go further.

Rachel Hopkins: Sadly, on Friday evening a young teenager in Luton South was stabbed and died. Like many others, I welcome the consultation. However, like others, whether from West Ham in a city, the village of Hemsworth, the valley of Rhondda or the town of Luton, how can I trust what the Government are saying about prevention when they have stripped £1 billion from youth services?

Chris Philp: I am sure that all in the House extend their condolences to the bereaved family in Luton for the incident that the hon. Lady described. We have talked about youth services quite extensively. Significant investment is being made via the Youth Endowment Fund, which is an evidence-based programme to put money into interventions that are proven to work using data. The violence reduction units in the 20 police force areas with the most significant challenges are funding local services to help young people in particular—in some cases as young as nine—on to a better path for the future. Those measures are working collectively. Violent crime is down by 38% since 2010, but clearly cases such as the one she mentioned mean that we cannot be complacent. There is more work to do. I am confident that by working together we can overcome the scourge of knife crime.

Points of Order

Caroline Lucas: On a point of order, Madam Deputy Speaker. At the Department for Energy Security and Net Zero oral questions this morning, the Under-Secretary of State for Energy Security and Net Zero, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) claimed that the Scottish Green party Minister Patrick Harvie had said:
“oil and gas workers in Aberdeen should simply get on their bikes and look for other jobs”.
I have confirmed with Mr Harvie that he never said that or anything like it. Through you, Madam Deputy Speaker, may I ask the Minister to urgently correct the record?

Rosie Winterton: I am grateful to the hon. Member for giving me notice of her point of order. Did she notify the Minister that she intended to raise it?

Caroline Lucas: indicated assent.

Rosie Winterton: Good. As she knows, Ministers are responsible for the accuracy of their statements, not the Chair. That said, if a mistake has been made, a correction should be given. However, that is a judgment for the Minister to make, rather than the Chair, but the hon. Lady has put her view on the record and I am sure that those on the Treasury Bench will hear what she has said.

Liam Byrne: On a point of order, Madam Deputy Speaker. I ask for your advice. On a shameful day in 2021, the Treasury issued a sanctions waiver for Yevgeny Prigozhin to hire lawyers from England to sue Eliot Higgins of Bellingcat. In January, the Exchequer Secretary said that that was a civil service decision and nothing to do with Ministers. Civil servants then replied to my freedom of information request to say that the framework was advice to Ministers and could not be released.
Now, the Treasury has issued new guidance to me in reply to my freedom of information request. In it, on six of the nine criteria, the decision should have gone to a Minister. The question is, why are Ministers not revealing the original framework by which the decision was taken? What are they trying to hide? We in this House cannot ensure that our sanctions policy is good and sound unless we can see the way that sanctions waiver decisions are taken. What would you advise me to do to ensure that this House is put in full knowledge of how that disgraceful decision was taken?

Rosie Winterton: I am grateful to the right hon. Member for giving notice of his point of order. I am sure he is aware that responses to FOI requests are a matter for the Government, not the Chair. Rather than saying that incorrect information has been provided, I think he is saying that not enough information has been provided about the reasons for the decision. I am sure that the right hon. Gentleman is very skilled in different ways of eliciting information from Ministers. He has made his point, and I hope that those on the Treasury Bench will take it back and that Ministers will have heard what he has said.

Bill Presented

Commonwealth Parliamentary Association (Status) No. 2 Bill

Presentation and First Reading (Standing Order No. 57)
Dame Maria Miller, supported by Mr Ian Liddell-Grainger, Chris Elmore, Steve Brine, Julie Elliott, Harriett Baldwin, Bob Blackman, Layla Moran, Taiwo Owatemi, Sir James Duddridge and Dr Lisa Cameron, presented a Bill to provide for corporate status of and for certain privileges and immunities to be accorded to the international inter-parliamentary organisation of national and sub-national legislatures of Commonwealth countries known as the Commonwealth Parliamentary Association and to its Secretary-General; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 16 June, and to be printed (Bill 292).

Public Office (Child Sexual Abuse)

Motion for leave to bring in a Bill (Standing Order No. 23)

Alexander Stafford: I beg to move,
That leave be given to bring in a Bill to make provision for the purpose of preventing a person who has failed to discharge a duty in respect of child sexual abuse offences from holding any elected office, from holding public office and from holding any post the remuneration of which is paid out of money provided by Parliament; to provide for the disqualification from any elected or appointed office of a person who has been convicted of child sexual abuse offences; to provide for the removal of a peerage from a person who has been convicted of child sexual abuse offences; and for connected purposes.
Rotherham holds the unpleasant role of having seen one of the largest child sexual abuse scandals in British history. Over the course of two decades, more than 1,500 children were raped, ruining lives, tearing apart families and decimating communities across Rotherham, including in Rother Valley. It truly is the worst crime imaginable, and the deep scars that cut through my area and others are, sadly, still evident today. Three separate police investigations resulted in nearly 50 people being convicted. Progress has been made, but there is still much work to be done to restore confidence and justice.
In Rotherham, the Jay and Casey inquiries laid out the problems at the heart of the issue by outlining the authorities’ unwillingness to act on information bravely passed to them by victims and connected parties. In many cases, councillors, council officers, police and other public officers turned a blind eye due to apparent concerns about upsetting racial sensitives or cultural differences. In plain English, they were too concerned about how they might look to stop children from being raped in our communities.
Indeed, the failures to act were found to be so great that the Government were forced to step in, disband the council and install independent commissioners. The council was labelled “not fit for purpose” and, in many cases, councillors deliberately neglected to properly investigate the reports they were given about the rapists. Sadly, these factors are not unique to Rotherham. Similar failures by local authorities have been exposed in other, once respected cities across our nation, such as Telford, Rochdale, Oxford and Huddersfield.
What makes the situation even more sickening for the brave survivors and victims still living in Rotherham is that some of the councillors who failed to act to protect those innocent children hold power and authority today, and no one in public office has ever been brought to justice for the failings. There are currently 12 sitting councillors in Rotherham who were elected prior to the Jay and Casey reports—12 councillors who were part of the culture of silence, dysfunctional leadership and denial at the council, who survivors tell me they do not and will never trust, and who they say should have been removed by the Labour party.
This injustice goes to the heart of my Bill. The Bill would ensure that no one who failed in their obligations to protect anyone, most of all children, or who has been convicted of child sexual abuse may hold public office or be employed in a taxpayer-funded position. How else  can we rebuild trust in these offices and, more importantly, how can justice be brought to victims and their families if those at fault still hold power over them?
The Bill goes further still. I believe that no one convicted of any child sexual abuse offences, including “facilitating” under section 14 of the Sexual Offences Act 2003, should be allowed to run for elected office or hold any public position of authority. Just as we already disqualify those serving long prison sentences or those who are bankrupt, the Bill would extend the powers to stop certain individuals from holding office.
Hon. Members would be forgiven for thinking that those involved would never seek to hold public office again. However, one cabinet member of that disgraced Rotherham Council was chosen only last year as the Labour parliamentary candidate for the area. He was subsequently forced to step down, but only after a huge backlash from the survivors and victims, one of whom said:
“No one who has had knowledge or stayed silent should be serving in any public office, let alone selected to run for Parliament”.
Finally, the Bill provides the powers necessary to strip peers convicted of these terrible crimes of their titles and privileges. The House will know about Lord Ahmed, also an ex-Rotherham Labour councillor, who was ennobled by the Labour party but then convicted of abusing two children under the age of 13. His retention of his peerage has caused huge damage to the reputation of honours system, as well as continued pain for his victims, who live with the knowledge that their abuser has been awarded and maintained the highest honour in the land.
The House will know that I have made it my priority to tackle child sexual exploitation and to bring about justice for my constituents. Along with my brave constituent, Sammy Woodhouse, for whom I have the greatest admiration, I have continuously called for the creation of a specialist child criminal and sexual exploitation commissioner, and I have supported her efforts to bring justice for victims and survivors.
I wholeheartedly support the Bill introduced by my hon. Friend the Member for Bolsover (Mark Fletcher) to ban sex offenders from changing their names. Both our proposals ensure justice for victims by preventing some of the worst criminals from escaping their unspeakable crimes. In a speech I gave not long after I was elected, I said that we must look at dealing with those who   allowed the criminals to get away with their crimes, and that those who turned a blind eye must face the full force of the law. The Bill would ensure exactly that.
I am pleased to report that the Government have not been idle in this area. The publication of the draft Victims Bill and the recent announcement of a new taskforce to crack down on grooming gangs have been well received in my area. As I mentioned, councillors and officials in Rotherham cited apparent concerns over cultural differences or the fact that they did not want to offend racial sensitivities as reasons for their silence. That paper-thin defence is an unacceptable attempt to escape responsibility for their part, in turning a blind eye, in the rape of hundreds of children. The Prime Minister’s declaration that so-called political correctness should not get in the way of cracking down on grooming gangs is a welcome step in the right direction. The Bill is firmly in the spirit of that assurance, but it goes further, ensuring both the vindication of victims and the legitimacy of public offices. It will secure justice, and ultimately rebuild trust and confidence in our political institutions.
In ending, I pay a final tribute to the brave people of Rotherham and Rother Valley, especially those who tried to put a stop to these vile monsters and those who, even now, tirelessly work to bring justice for victims. I thank colleagues across the House for their support for the Bill, in particular my right hon. Friend the Member for Witham (Priti Patel), who developed the Government’s robust tackling child sexual abuse strategy when she was Home Secretary.
We must defend the vulnerable robustly and pursue abusers, without fear or hesitation. We must fix what we know to be a system that is clearly not fit for purpose, and that fails our constituents. We know the required changes, and there is no reason not to take simple steps to implement them. Survivors, their families and our children deserve protection and justice, and so I commend this ten-minute rule Bill to the House, to ensure that those who committed, enabled or turned a blind eye to such monstrous acts must never hold authority in or over victims, communities or our society ever again.
Question put and agreed to.
Ordered,
That Alexander Stafford, Priti Patel, Nick Fletcher, Alun Cairns, Vicky Ford, Robbie Moore, Miriam Cates, Sir James Duddridge, Kelly Tolhurst, Andrew Selous, Greg Smith and Andrea Jenkyns present the Bill.
Alexander Stafford accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 24 November, and to be printed (Bill 291).

Finance (No. 2) Bill

[1st Allocated Day] - Corporation tax charges and rates (Clauses 5 and 6); capital allowances (Clauses 7 to 9); other reliefs relating to businesses (Clause 10 and Schedule 1; Clauses 11 to 15); multinational top-up tax (Clauses 121 to 125  and Schedule 14; Clauses 126 and 127 and Schedule 15; Clauses 128 to 260 and Schedule 16; Clause 261 and Schedule 17; Clauses 262 to 264); domestic top-up tax (Clauses 265 to 275 and Schedule 18; Clauses 276 and 277); any new Clauses or new Schedules relating to the subject matter of those Clauses and those Schedules

Considered in Committee
[Dame Rosie Winterton in the Chair]

Rosie Winterton: I remind Members that in Committee, Members should not address the Chair as “Deputy Speaker”. Please use our names when addressing the Chair. “Madam Chair”, “Chair”, “Madam Chairman” and “Mr Chairman” are also acceptable.

Clause 5 - Charge and main rate for financial year 2024

Question proposed, That the clause stand part of the Bill.

Rosie Winterton: With this it will be convenient to consider the following:
Clauses 6 to 10 stand part.
Amendment 26, in schedule 1, page 280, line 32, leave out
“a requirement relating to the making of the claim”
and insert
“the requirement to make a claim notification pursuant to either section 104AA, section 1045A or 1054A of CTA 2009 (as appropriate) or failed to provide the additional information as required by paragraph 83EA”.
This amendment would make clear that the power to remove a claim for R&D relief from a corporation tax return is only available to HMRC where a company has failed to make a claim notification (required pursuant to Part 1 of this Schedule) or  to submit the additional information (required pursuant to paragraph 13 of this Schedule).
Government amendment 14.
That schedule 1 be the First schedule to the Bill.
Clauses 11 to 15 stand part.
Clauses 121 to 125 stand part.
That schedule 14 be the Fourteenth schedule to the Bill.
Clauses 126 and 127 stand part.
That schedule 15 be the Fifteenth schedule to the Bill.
Clauses 128 to 173 stand part.
Government amendment 12.
Clauses 174 to 222 stand part.
Government amendment 13.
Clauses 223 to 260 stand part.
Government amendments 15 to 20.
That schedule 16 be the Sixteenth schedule to the Bill.
Clause 261 stand part.
That schedule 17 be the Seventeenth schedule to the Bill.
Clauses 262 to 275 stand part.
That schedule 18 be the Eighteenth schedule to the Bill.
Clauses 276 and 277 stand part.
New clause 1—Statement on efforts to support implementation of the Pillar 2 model rules—
‘(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.’
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
New clause 3—Review of business taxes—
‘(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the business taxes, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how to—
(a) use business taxes to encourage and increase the investment of profits and revenue;
(b) ensure businesses have more certainty about the taxes to which they are subject; and
(c) ensure that the system of capital allowances operates effectively to incentivise investment, including for small businesses.
(3) In this section, “the business taxes” includes any tax in respect of which this Act makes provision that is paid by a business, including in particular provisions made under sections 5 to 15 of this Act.’
This new clause would require the Chancellor to conduct a review of business taxes, and to make recommendations on how to increase certainty and investment, before the next Finance Bill is published.
New clause 6—Review of energy (oil and gas) profits levy allowances—
‘(1) The Chancellor of the Exchequer must, within three months of the passing of this Act—
(a) conduct a review of section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022, as introduced by subsection 12(2) of this Act, and
(b) lay before the House of Commons a report arising from the review.
(2) The review must include consideration of the implications for the public finances of the provisions in section 2(3)—
(a) were all the provisions in section (2)(3) to apply, and
(b) were the provisions in section 2(3)(b) not to apply.’
This new clause requires the Chancellor to review the investment allowances introduced as part of the energy profits levy, and to set out what would happen if the allowance for all expenditure, apart from that spent on de-carbonisation, were removed.
New clause 7—Review of effects of Act on SME R&D tax credit—
‘(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review of the impact of the measures contained in this Act on the rate of inflation and on small businesses.
(2) The review must compare the regime for SME R&D tax credits and associated reliefs before and after 1 April 2023, with regard to the following—
(a) the viability and competitiveness of UK technology startup and scale-up businesses,
(b) the number of jobs created and lost in the UK technology sector, and
(c) long-term UK economic growth.
(3) In this section, “technology startup” means a business trading for no more than three years; with an average headcount of staff of less than 50 during that three-year period; and which spends at least 15% of its costs on research and development activities.
(4) In this section, “technology scale-up” means a business that has achieved growth of 20% or more in either employment or turnover year on year for at least two years and has a minimum employee count of 10 at the start of the observation period; and spends at least 15% of its costs on research and development activities.’
This new clause would require the Government to produce an impact assessment of the effect of changes to SME R&D tax credits in this act on tech start-ups and scale-ups.
New clause 8—Relief for R&D expenditure on data and cloud computing: assessment—
‘Within six months of this Act coming into force, the Chancellor of the Exchequer must publish an assessment of—
(a) the overall costs,
(b) the overall benefits, and
(c) the net cost or benefit
of extending relief of R&D expenditure to profit-making cloud computing services.’
New clause 10—Assessment of the impact of the de-carbonisation allowance—
‘(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, publish an assessment of—
(a) the financial cost of the de-carbonisation allowance to the Treasury,
(b) the impact of the de-carbonisation allowance on overall investment in UK upstream petroleum production, and
(c) the revenue that the energy (oil and gas) profits levy would yield if neither the de-carbonisation allowance nor the investment allowance had effect in respect of investment expenditure.
(2) The assessment must cover the whole period that the allowance is in effect and also assess the revenue in each tax year.
(3) The assessment must include an evaluation of the impact of the de-carbonisation allowance and the investment allowance on the United Kingdom’s ability to meet its climate commitments, including—
(a) the target for 2050 set out in section 1 of the Climate Change Act 2008,
(b) the duty under section 4 of the Climate Change Act 2008 to ensure that the net UK carbon account for a budgetary period does not exceed the carbon budget, and
(c) the commitment given by the government of the United Kingdom in the Glasgow Climate Pact to pursue policies to limit global warming to 1.5 degrees Celsius and phase out inefficient fossil fuel subsidies.’
This new clause would require the Government to produce an impact assessment of the de-carbonisation and investment allowances under the Energy Profits Levy, including on tax revenues and the UK’s ability to meet its climate targets.

Victoria Atkins: It is a pleasure to serve under your chairmanship, Dame Rosie.
Before I start, I would like to pay tribute to a previous Financial Secretary to Treasury, namely the right hon. Lord Lawson of Blaby, who sadly passed away while the House was in recess. After the Conservative party’s historic election win in 1979, he took office as the FST, calling inflation “a disease of money”. To this day, we on the Government Benches recognise that, which is why the Prime Minister is determined to halve inflation as one of his five promises to the public.
Margaret Thatcher recognised Lord Lawson’s talents, his incisive intellect and his single-minded determination to reshape the UK economy, and in due course she appointed him as her Chancellor. He went on to deliver six Budgets, drinking, I am told, a spritzer as he did so, and he set the framework for today’s tax system. He was an intellectual and political giant, and we pay tribute to him in this place.
The measures before the Committee today relate to the Bill’s clauses on corporation tax, investment incentives and the global minimum tax on large multinational businesses. The changes that they make will support business investment and innovation in the UK, while contributing to fiscal sustainability and protecting our tax base against harmful tax planning.
Clause 5 legislates for the right to charge corporation tax and maintain the rate at 25% for the 2024 financial year, in line with the 2021 spring Budget announcement. As hon. Members will know, we legislated in the Finance Act 2021 to increase the main rate of corporation tax to 25% from this month, April 2023. We typically legislate a year in advance to provide certainty to large companies that pay corporation tax in advance on the basis of their estimated tax liabilities. The rate increase, which took effect from this year and which the Bill will maintain for the 2024 financial year, is forecast to raise more than £85 billion in the next five years. It will make a vital contribution to ensuring that our debt continues to fall, as part of the Prime Minister’s five pledges, while allowing us to continue to invest in our much-cherished public services.

Kit Malthouse: I draw attention to my entry in the Register of Members’ Financial Interests. As the Minister says, the Government are legislating in advance of next year. Can she reassure the Committee that as we approach next year, the Government will review not just the headline rate—a juicy and necessary source of income for the Treasury—but the thresholds? The media are full of the fact that at over £250,000 profit, people will be paying the higher rate, but there is also a transitional zone between £50,000 and £250,000 profits, which is exactly the ellipse of small company growth where companies need that  money to invest for more growth. If there is a detrimental impact within that transitional zone, will the Minister undertake to review it in advance of next year? Will she perhaps think about shifting the thresholds upwards so that we do not constrain the growth that we so need in the economy?

Victoria Atkins: I acknowledge my right hon. Friend’s experience, not only at the Dispatch Box but, importantly, in the world of accountancy and business. I reassure him that the Treasury keeps all taxes under review. He is right to draw attention to clause 6, which maintains the small profits rate because, precisely as he says, we want to encourage small businesses that are in the first flourishes of profit and help them to build.
There are two measures that I hope will reassure my right hon. Friend. First, the small profits rate means that 70% of businesses will see no increase at all in their corporation tax charges. Because of the threshold that he describes, a further 20% will fall into that spectrum, so only 10% of businesses will face the full 25% rate. If they invest in their businesses and in plant and productivity, as we very much want and encourage them to, they will—depending on their returns—be eligible either for the full expensing capital allowance that the Chancellor announced alongside this measure at the spring Budget or for the annual investment allowance. This Budget was very much about encouraging growth and encouraging the small businesses on which my right hon. Friend the Member for North West Hampshire (Kit Malthouse) so rightly focuses, but we are doing so as part of a responsible fiscal approach and making sure that those with the broadest shoulders bear the greatest burden of tax.

Jim Shannon: I thank the Minister for outlining the provisions on corporation tax. Obviously corporation tax will be the same everywhere, but in the light of the peculiar circumstances in Northern Ireland—the region is much more under pressure when it comes to jobs—can she reassure me and my constituents back home that small businesses in Northern Ireland will feel the benefits of what she is putting forward?

Victoria Atkins: Very much so. I am conscious that the hon. Gentleman’s constituency and his corner of the United Kingdom are marking the very important anniversary of the Good Friday agreement; we wish everyone who is marking that occasion the very best for the future. I know that there are points of contention with his party, but one reason why we are so very committed to the Windsor framework is that we want to ensure that issues that have arisen through the Northern Ireland protocol are resolved with the EU to enable the economic flourishing that he rightly describes.
I can reassure the hon. Gentleman and my right hon. Friend the Member for North West Hampshire that even with the increase to 25%, we will still have the lowest rate of corporation tax in the G7. What is more, it will be lower than at any point before 2010. I very much hope that the Committee understands why we are taking this approach: because we have to take a fiscally responsible approach to our public finances, but we want to do so while encouraging growth and international competitiveness.
Clause 6 will maintain the small profits rate, as I hope I explained in answer to my right hon. Friend’s intervention. Clause 11 will update the patent box legislation to reflect the introduction of the small profits rate. The patent box incentivises the retention and commercialisation of intellectual property, allowing UK companies to elect to pay a lower rate based on their earnings from patents or similarly robust IP. This is part of our drive to encourage innovation and growth in our economy.
We are not stopping there. A competitive corporate tax system that supports growth, investment and innovation is about so much more than just the headline corporation tax rate; the availability and generosity of reliefs also matter. Clause 7 will therefore introduce new first year capital allowances, including a 100% first year allowance for qualifying new main rate plant and machinery investments, known as full expensing. It will also introduce a 50% first year allowance for new special rate expenditure such as long-life assets. Full expensing offers a substantial financial incentive for companies to increase their investment, improving their cash flow by lowering their corporation tax bill in the year of investment.
These changes will provide a £27 billion tax cut for companies over three years. They will help to boost business investment by ensuring that the UK’s capital allowances regime is among the world’s most competitive: joint first by OECD net present value. The independent Office for Budget Responsibility estimates that full expensing will increase business investment by 3% for each year that it is in place. What is more, the Chancellor has set out his intention to make the measure permanent when fiscal conditions allow.
Clause 8 will set the maximum amount of the annual investment allowance at £1,000,000 indefinitely, providing certainty to the more than 99% of businesses that invest up to that amount.
Clause 9 will make changes to extend the generous 100% first year allowance for electric vehicle charging equipment. This will continue to encourage businesses to invest in the roll-out of charging equipment, which will be a key enabler of the transition to zero-emission vehicles.
Clause 10 and schedule 1 set out changes that will modernise research and development tax reliefs in order to better incentivise R&D methods that rely on vast quantities of data which are analysed and processed via the cloud. These changes will also help reduce error and fraud, requiring claims to include more information—including the name of any agent involved—and to be provided digitally. The Government have tabled amendment 14, which is a technical fix to ensure that companies claiming small and medium-sized enterprise credits will be able to benefit from the change in the going concern rules.
Clause 12 will introduce a new rate of investment allowance in the energy profits levy, set at 80%, for qualifying expenditure on decarbonising upstream  oil and gas production. This builds on the existing 29% investment allowance which is designed to encourage the sector to reinvest its profits to support the economy, jobs, and the UK’s energy security. It supports key commitments in the North sea transition deal and the Government’s aims for net zero by 2050. Clauses 13 and 14 will extend the duration of the reliefs available to our important cultural sectors, including orchestras, theatres,  museums and galleries, to meet ongoing pressures and to boost investment in those wonderful and important cultural bodies.
The final clause relating to investment incentives is clause 15. As well as making other improvements, it increases the amount of seed enterprise investment scheme funding that companies can raise over their lifetimes from £150,000 to £250,000. This will boost start-ups and young companies by widening access to the SEIS and increasing the funding limits, and we estimate that it will help more than 2,000 very early-stage companies a year to gain access to finance.

Kit Malthouse: Let me again draw attention to my entry in the Register of Members’ Financial Interests.
The SEIS changes are welcome, but, as I am sure the Minister knows, the amount of initial finance raised under the SEIS and, indeed, the enterprise investment scheme has been declining in recent years. That may be a reflection of the wider economic environment, but it nevertheless means that fewer businesses are being started under that scheme. Will the Minister and her Treasury colleagues give some consideration over the next few years to the sheer complexity that is involved in making what is a relatively small investment through the SEIS? The scheme deals with quite small amounts of capital—£25,000 or so—but an accountant and a lawyer are needed, as is pre-authorisation from His Majesty’s Revenue and Customs. An enormous amount of compliance is required even before a company makes its first investment, and a fair amount of the investment that is being made can be absorbed in compliance costs. Complexity is therefore as much of a deterrent as the limits on the scheme, which may be why it is not being taken up with the enthusiasm that I am sure the Minister would like to see.

Victoria Atkins: I genuinely thank my right hon. Friend for that intervention. I am trying to ensure that, not just in the context of this fiscal event but in our work across the Treasury, we focus on the pressure points involved in developing a business—setting it up, employing the first member of staff, and all the other major milestones that constitute a critical part of the journey towards growing a business. Obviously there has to be paperwork, but we want to ensure that it does not get in the way.
I will take away some of the ideas that my right hon. Friend has advanced, but let me also say that I very much understand his concerns. One of the main challenges that I issue to the Treasury during every one of our policy discussions is “Does this proposal make tax fairer, does it make it simpler, and does it support growth?” Those are the three objectives that I will be endeavouring to meet in all my work as Financial Secretary to the Treasury.
Let me now turn to the measures in clauses 121 to 277 and schedules 14 to 18, which constitute a large proportion of the Bill. I know that, rightly, they are meeting the sort of scrutiny that we expect of parliamentary colleagues, because they relate to a very significant international agreement. In 2021, my right hon. Friend the Prime Minister brokered an international deal as part of our G7 presidency to tackle profit shifting by large multinational groups and to level the playing field between countries for tax competition. That will ensure that countries are  better able to tax the profits that multinational groups generate from trading in their jurisdictions. More than 135 countries have now signed up to the deal, including all members of the G7.
These changes mean that, regardless of where a multinational group operates, it pays tax of at least 15% on its revenues, or profits. This will protect the UK from multinational tax planning by removing the incentives to shift profits out of the UK for tax purposes, and will help to ensure that profits generated in the UK are taxed in the UK. It will also strengthen the UK’s international competitiveness by raising the floor on the low—or no—tax rates that have been available in some countries, while ensuring that groups are not exposed to top-up taxation in the UK as a result of the UK’s world-leading R&D credit and full expensing regimes. Finally, it will ensure that the top-up tax due from UK groups under pillar two is collected in the UK rather than being collected by other countries, which could be the case if we did not implement these arrangements by 31 December.

Vicky Ford: As my hon. Friend says, this is a large and significant part of the Bill. It is of course important for multinational companies to pay their fair share of tax, but for too long too many have not done so, and it is good news that action is being taken in that regard. If it is to work, however, we must ensure that other countries not only sign up to the rules but implement them. I am thinking in particular of the possible impact on sectors such as insurance. My constituency contains a great many insurance companies, and many of my constituents work in the sector. It is a global industry, in which we happen to be the world leader.
We need to ensure that other countries implement these rules, as they have promised to do, and do not end up trying to avoid doing so, thus undermining our own competitiveness and potentially forcing businesses that have been paying tax in the UK to go overseas. May I therefore urge my hon. Friend and her excellent team at the Treasury to focus, laser-like, on ensuring that all countries do implement the rules, as they have promised? We have seen, time and again, many EU countries signing up to rules and then not implementing them in accordance with the timescales. Will my hon. Friend also ensure that if other countries try to retaliate against our measures—through sanctions, for example—we will not just rely on the undertaxed profits rule to ensure that we can obtain taxes from them, but will have a plan B up our own sleeve to ensure that our industries and our competitiveness are not threatened?

Victoria Atkins: My right hon. Friend has been very good at representing the interests of her constituents. I certainly acknowledge the significant rule that the insurance sector plays in her constituency, and, indeed, the role that her constituents play in that industry. I want to develop my argument a little, but I hope I will be able to reassure her on the points that she has raised—and I will come to the point about implementation, because I think it is important.
Let me try to help Members navigate this rather large piece of legislation. Part 3 deals with the multinational top-up tax, which is introduced by clauses 121 to 131 and schedule 14 for multinational groups whose global revenues exceed €750 million a year.
Clause 132 determines how multinationals should calculate their effective tax rate for a territory. Clauses 133 to 172 set out how multinational groups should determine their underlying profit and then make adjustments. Clauses 173 to 192 describe how to determine the amount of taxes called covered taxes paid by a multinational that should be included in the effective tax rate calculation. Clauses 193 to 199 set out how multinationals should use the effective tax rate and adjusted profit they have calculated to work out how much top-up tax, if any, is due for each territory in which they operate.
Clauses 200 and 201 set out how much of the top-up tax in the low-tax jurisdiction should be attributed to the responsible members of the group. Clauses 202 to 219 set out further adjustments to deal with particular circumstances, including losses, and rules that apply an additional top-up amount where the covered taxes are less than expected.
Many multinationals will include entities that are not wholly owned. This means that they need specific rules, which are set out in clauses 226 to 229. Clauses 220 to 225 set out how the rules work for investment entities, which was a key ask for the insurance sector. I am providing this level of detail at this stage to give the House a sense of just how much work has gone into this set of rules internationally and, importantly, how we in the UK have managed to influence and shape the rules before we bring them before the House in this Finance Bill. Clauses 230 to 259 provide definitions for the various terms, and clauses 260 to 264 set out general and miscellaneous provisions.
The Government are also introducing technical adjustments in amendments 12 to 13 and 15 to 20. Amendment 12 will remove unnecessary duplication. Amendment 13 will ensure that tax paid that contributes to the effective tax rate is appropriately allocated to group members. Amendments 15 to 20 will ensure that the transitional rules work effectively.
Part 4 of the Bill focuses on the domestic top-up tax, which will largely mirror the functionality of the multinational top-up tax but which is in itself an important measure because it ensures that multinational groups operating in the UK pay any top-up tax here on their UK profits. Without it—this is the critical point about implementation—other countries that have introduced a multinational top-up tax will collect this tax. The domestic top-up tax will also apply to groups that operate only in the UK, ensuring that all in-scope groups operating in the UK are treated consistently, preventing economic distortions. Clauses 265 to 277 deal with both the domestic top-up tax and the interplay with the multinational top-up tax legislation.
I listened carefully to the scrutiny provided by right hon. and hon. Friends on Second Reading, and I want to try to answer one or two of the points raised. That is important, because this is what Committee of the whole House is for, after all. On the question of implementation and the actions of others, which my right hon. Friend the Member for Chelmsford (Vicky Ford) has just raised, the UK is not acting alone here. Germany, Spain, Italy, France, the Netherlands, Sweden, Ireland and Belgium— indeed, the EU as a whole—are acting alongside us, as  are Canada, South Korea and Japan. South Africa, Singapore and Hong Kong are all preparing to implement in 2024 or 2025. [Interruption.] I hear chuntering from behind me, so I will break some of that down. Those countries are in the process of legislating. In fact, since we last met, Ireland has published draft legislation and Japan has enacted its laws. The House already knows that the EU has set a directive for implementation by 31 December, and we are working closely with the largest EU member states to ensure that progress is made.
I know that colleagues also focus on the US, so I will spend a little bit of time on this. In 2017 the US introduced a minimum tax on the foreign income of its multinationals. It has also recently introduced a further minimum tax on the aggregate domestic and foreign income of large groups, which includes the US income of foreign-headed multinationals. The US therefore already has in place rules that operate on a similar basis to pillar two, and it has been one of the strongest advocates of developing a global standard. This means that the differences in outcomes for US businesses are perhaps not as large as some of my hon. Friends might think.

Jacob Rees-Mogg: One has to be a bit careful when talking about the US, because although the President might be in favour of this, the Republicans in the House of Representatives have made it absolutely clear that they are not, and as they have a majority there, that is quite significant.

Victoria Atkins: Yes, of course, but we have to work with the US Administration this week, next week and the year after next. That is why, with the US having its own rules and with its encouragement that these global standards should be applied, we are in lockstep with other countries in implementing this rule. I would just make the point that this is unprecedented; this is new and we have to be realistic. A hundred years ago we did not have multinational groups operating in the way that they do today, or in the way they will in five or 10 years’ time. We as an international community are trying to deal with some of the aggressive tax planning that we have seen multinational groups indulge in. We want to raise the floor, and those economies have signed up to this. They are part of the 135 countries that have committed themselves to this agreement. That is what was so important about the agreement, and these taxes will apply in those jurisdictions even if they have not implemented it.

Richard Fuller: I am grateful to the Minister for giving way, and I apologise for not being here for the start of her speech. Can I just pick up on her remark that these countries have “committed” to this? A commitment in words to an international treaty is not the same as a commitment to enactment in domestic legislation. This is the point that my right hon. Friend the Member for North East Somerset (Mr Rees-Mogg) was making. In the United States it is clear that although there might be an international intent to enact this legislation, there is certainly no legislative intent that it should be passed into US law. I have other points to make but I will finish on that point and simply ask the Minister for her comment  on that.

Victoria Atkins: First, this is an international agreement and nobody has forced the US, or anyone else, to sign up. As I say, 135 countries have signed up to it and a significant number are already implementing it or bringing forward legislation to do so. Indeed, the US Administration have maintained their commitment to align their rules with the pillar two standards. Until that happens, however, the OECD inclusive framework members, including the US, have agreed on how the US rules and the pillar two rules should interact to ensure that US multinationals are subject to the same standard as groups in other countries.
The long and the short of it is that we should be proud of the fact that we in the United Kingdom have helped to shape—and will continue to shape—these rules, precisely because we are able to work in unison with other large economies. As a result, we have been able to retain the corporate tax levers that we care so much about, such as research and development tax credits and the full expensing policy that my right hon. Friend the Chancellor announced at Budget, and to ensure that issues specific to the UK financial sector are identified and addressed.

Richard Fuller: On the Minister’s point about being proud to implement this, I would say that the shadow Minister, representing the high-tax Labour party, might be happy to implement it, but I am not sure that I would have quite the same degree of enthusiasm as a Conservative. I want to probe a bit deeper on a fundamental question that the Minister gave an interesting answer to, which is about how the United States’ interpretation of this is going to be held in the international context. Was she saying that the other countries in the international community that have signed up to it have effectively agreed that America does not need to go any further than its existing legislation in order to meet the requirements of this international standard? Or is she saying that there is still a requirement for the United States to enact it? If it is the latter, does she agree that the UK should not go forward and make its own changes until the United States makes those changes?

Victoria Atkins: I remind my hon. Friend that this is a minimum floor of 15%, which is below the lowest rate of corporation tax payable in this country, 19%, and below the 25% corporation tax we are setting for both this financial year and the next financial year in this Bill.
The countries most affected by this change are those that set lower rates of corporation tax. This international agreement is important because it means, when our constituents ask us why a particular tech giant has headquartered itself somewhere other than the UK while making enormous profits on its activities here—my hon. Friend the Member for North East Bedfordshire (Richard Fuller) will appreciate that I am not naming any businesses—we can say that we have joined an international agreement to ensure that such profit shifting does not occur. In the shifting sands of the 21st century and beyond we, as an international community, have to find ways of ensuring that companies cannot engage in profit shifting.
I normally try not to reference Labour Front Benchers, but my hon. Friend the Member for North East Bedfordshire mentioned them. Through this Finance Bill—and I know he fundamentally believes in this—we are taking a fiscally responsible approach to taxation.  We understand that those with the broadest shoulders should bear the greatest burden of taxation, but we want to do it in a way that encourages growth and investment, and encourages businesses to set up and trade in our economy. Full expensing, R&D tax reliefs and the measures we introduced into the OECD agreement because of the concerns voiced by the insurance sector—these are examples of how we have been able to lead the international community in these negotiations and influence how the rules interact with our needs as a country.

Vicky Ford: Put simply, it is important that multinational companies pay their taxes and it is good that the UK has agreed a new set of rules, but we need other countries to play the game according to the rules to which they have agreed. Will my hon. Friend keep a laser-like focus on ensuring that other countries play the game according to the rules? If they do not, will she make sure we have a plan B up our sleeve to defend our interests?

Victoria Atkins: I repeat that the date for implementation is 31 December. The EU has issued a directive and, as I outlined, the major economies within the EU are already bringing together the legislation to enact this. Japan has already legislated, and others are following.
I would argue that our plan B is in the very rules of this international agreement. The rules work because they ensure that every low-taxed multinational company pays the top-up tax that is due, whether or not it is headquartered in a country that has introduced pillar two. Those economies that rely on low tax rates understand that, because of how business is now conducted in some regards, we are raising the floor of international taxation so that those with the broadest shoulders continue to pay.

Kit Malthouse: Will my hon. Friend give way?

Victoria Atkins: I will give way once more, and then I will make some progress.

Kit Malthouse: The Minister is being generous with her time, although we are in Committee, so detailed scrutiny and questions are appropriate.
I have a couple of questions. The Minister says that one of her missions is simplicity, and I know she understands that this measure will necessarily add several thousand pages to “Tolley’s Tax Guide”, which is now in two volumes—it was only one volume when I trained as an accountant. That is unfortunate, and we can debate the desirability or otherwise of this measure, but what protections are there against the creation of just another game?
Although this Bill seeks to set a minimum floor on the headline corporation tax rate, it is perfectly possible for countries to compete on effective corporation tax rates. Are we likely to see Governments around the world play a game of competitive subsidies and competitive allowances? We will have full expensing, but some of our competitors will not—full expensing will reduce the effective rate for quite a lot of capital-intensive businesses, although not necessarily for services businesses—but there will now be a menu of allowances, derogations and tax breaks that can effectively be used to play a slight game of subterfuge as we all compete for these large, and now very mobile, businesses to locate in our territories.

Victoria Atkins: My right hon. Friend raises an interesting point. We have been leading the negotiations on this precisely so that we are able to bring in some of these allowances, which we fundamentally believe will help to support investment and growth in the UK economy. On multinational companies, we are trying to raise the floor in those jurisdictions that currently charge below 15%.

Kit Malthouse: Perhaps I was not entirely clear. For example, it is perfectly possible for us to say that our headline corporation tax rate is 25%, but we previously had—we are now getting rid of it—a super deduction that allowed me to offset more than 100% of any cost or investment against my tax and, therefore, reduce my effective rate of corporation tax to much less than 25%.
It is possible, away from the headline rate at which we are imposing this minimum rate around the world, for Governments to play the game of subsidy. “We will give you £150 million to come to our country, and you then pay 25% corporation tax. It is like for like. I am paying you, but I am getting my money back.” It is also possible to create a raft of allowances against that income, which will reduce the effective rate. The headline rate then becomes less important than the effective rate. We may well be kicking off that game with this measure. I am not entirely sure what protections there are against that, and against the complexity that comes with it, in this Bill.

Victoria Atkins: On the complexity point, having set my three objectives, of course I acknowledge that there will be times of tension between fairness and simplicity. Indeed, I said that in the Budget debate and on Second Reading. We believe it is fair to have a spectrum of corporation tax thresholds between 19% and 25% as businesses grow and accrue profits, but I fully admit that does not make it simple. The balance the Government have to strike is where there might be tension between fairness and simplicity. Of course, we always want to ensure that fairness prevails.
I take my right hon. Friend’s point about complexity, but I gently remind him that these enormous multinational groups have armies of lawyers and accountants looking after their affairs. One might say that many of them have been able to shift their profits in this way because they are able to conduct that analysis. I should say that they are doing it completely lawfully, and there is no allegation of misfeasance, but we wish to bring forward this international agreement.
In the 21st century, we should not be frivolous or dismissive about encouraging businesses to invest in plant, machinery and people. I know my right hon. Friend is not being frivolous or dismissive, but this is not a game. If we can encourage multinational groups to come and do more business here, to invest in our workforce and in other businesses, that would be a great thing for the UK economy. This international agreement is about trying to introduce a level playing field in 135 countries to ensure multinationals are taxed fairly in each jurisdiction.
Finally, if we do not implement this measure, the top-up tax that these groups would have paid to the UK will be collected by other countries. This important agreement was reached by the Prime Minister when he  was Chancellor, during our G7 presidency, and we want to enact it in this Finance Bill to enable it to take effect.

Richard Fuller: As has been mentioned, the Minister is being extremely generous in providing answers to some of these important questions. This may be a little niche, but may I take her back to the experience of the United States? A large number of US multinational companies, such as Apple and others that will be covered by this measure, held their cash balances offshore and did not take them back to the US because of the levels of corporation tax. Those levels were reduced under President Trump from 33% to 21% or 25%, I believe, but then in addition a special law was introduced providing for a 15.5% repatriation tax. That one-off tax enabled or incentivised companies such as Apple to bring their resources back to the US and pay tax there. Under the specifications both within the UK and under our international agreements, will what she is asking us to support today enable the UK to make one-off changes that might be in the specific interests of our corporations to help them bring back capital here? She may not know that—

Victoria Atkins: I hope I have understood my hon. Friend correctly. I am always loth to draw direct comparisons, particularly at the Dispatch Box, between the way in which the US conducts its tax affairs and the way we do so, as the systems are different. He has alighted upon the changes that the previous President made. The current President has also indicated that he wishes to make changes, albeit perhaps in a different direction. I hope my hon. Friend will appreciate my being cautious before giving an answer. I do not know whether he is referring to the corporate alternative minimum tax and the global intangible low-taxed income provisions. If I may, I will write to him on this, because it is incredibly technical and I want to ensure that I answer him accurately.
Having taken that final intervention, I am very conscious that although this is a large piece of legislation, colleagues are rightly scrutinising it. I shall sit down now so that they have a chance to have their say on it. I ask that clauses 5 to 15, and 121 to 277, and schedules 14 to 18 stand part of the Bill.

Rosie Winterton: I call the shadow Minister.

James Murray: Thank you, Dame Rosie, for the opportunity to respond on behalf of the Opposition. I would like to speak to the amendments and new clauses in my name and that of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare).
When we debated this Bill’s Second Reading at end of last month, we made it clear that what we needed was a plan to get us out of what the previous Chancellor rightly called a “vicious cycle of stagnation”. We need a plan for growth—a plan to raise the living standards of everyone in every part of the country—but this Government have failed to offer us one. That much was clear from the data published alongside the Budget, which showed that ours is the only G7 economy forecast to shrink this year and that our long-term growth forecasts were downgraded in the Office for Budget Responsibility report.
Since we last debated this Bill, further data has been published confirming our fears. Earlier this month, a report from the International Monetary Fund put the UK’s growth prospects this year at the bottom of those of the G20 biggest economies—a group that includes sanctions-hit Russia. After 13 years of economic failure, people and businesses across the UK deserve so much better than that. They deserve a plan for the economy that offers more than managed decline. So today, we begin by looking at some of the measures the Government are seeking to introduce in this Bill and explaining why their approach is letting Britain down.
First, let me speak to clauses 5 to 15, which address the rate of corporation tax, capital allowances and other reliefs relating to businesses. On those, one thing prized above all else is the need for certainty and stability. Businesses across the country want stability, certainty and a long-term plan, yet under the Conservatives corporation tax has changed almost every year since 2010. Furthermore, as the Resolution Foundation has pointed out, the introduction of the latest temporary regime for corporation tax represents the fifth major change in just two years. It seems that the Conservatives are simply incapable of offering stability.
Let us start by looking at the main rate of corporation tax, which clause 5 sets at 25% for the financial year beginning in April 2024. The clause will mean that corporation tax will continue to be charged at the rate to which it rose at the start of this month. That rate, 25%, was first announced by the Prime Minister, when he was Chancellor, in his spring Budget 2021. One might think that sounds like a rare example of certainty, but, sadly, that is not the case. As we know, last September, the then Chancellor, the one who said our economy was trapped in a “vicious cycle of stagnation”, announced that the rise to 25% would be cancelled, leaving the rate at 19%. That was of course reversed just a month later, when the current Chancellor moved into No. 11, and confirmed that the rise to 25% was back on. So much for stability! But we are where we are, and if we are to assume that the current Chancellor’s plans will indeed go ahead—a bold assumption, I admit—the rise to 25% will now continue from April 2024.
With the rate of corporation tax being increased, it is particularly important to get capital allowances right. The Government should be focused on giving businesses certainty that will help them to plan and increase their investment in the UK economy. We need that certainty and greater investment—the UK currently has the lowest investment as a percentage of GDP in the G7—yet the approach in clause 7 is to introduce temporary full expensing for expenditure on plant and machinery for three years only. By making that change temporary, it only brings forward investment, rather than increasing its level overall. The Government’s own policy paper on this measure, published on the day of the Budget, makes that clear. It says:
“This measure will incentivise businesses to bring forward investment to benefit from the tax relief.”
As the Office for Budget Responsibility has made clear, the Government’s approach will mean that business investment between 2022 and 2028 is essentially unchanged as a result of these measures. If anything, there is a very slight fall. Britain deserves better than this. As Paul  Johnson of the Institute for Fiscal Studies said in response to this temporary tweak to the tax regime for businesses:
“There’s no stability, no certainty, and no sense of a wider plan.”
That is why we have tabled new clause 3, which would require the Chancellor to follow Labour’s lead by developing a wider plan for business taxes, which we believe is needed. As my right hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor has set out—

Kit Malthouse: I wish to challenge the hon. Gentleman’s assertion about the notion of a window. We know that where taxation is concerned the creation of a window can often create an incentive to move quickly. For example, when there was a stamp duty window, we saw a significant number of transactions brought forward and take place. The Government are saying that they want to see very significant investment taking place. We know that British industry has accumulated a large amount of cash on its balance sheets. Why would the Government not create a particular incentive by saying, “Look, there is a deadline. If you get in now, we will give you this very generous tax break and then who knows what may happen in the future”? We must not forget that although the investment may absorb all of the profit for small businesses, it will, in effect, create a tax loss that is able to be carried forward beyond the window. So I do not understand his criticism of our having a window if, as the Government say, they want action now rather than in three years’ time.

James Murray: I thank the right hon. Gentleman for his intervention but I feel he rather misses the point. Surely having a temporary change merely moves investment around, rather than increasing its overall level, as the OBR has set out. We have the lowest investment as a percentage of GDP in the G7, so the importance of increasing investment should be agreed by Members in all parts of this House. We need a wider plan that will give that stability and certainty, which is exactly what my right hon. Friend the shadow Chancellor has set out. She has set out Labour’s mission to secure the highest sustained growth in the G7, which means that in government we would review the business tax system and set out a clear road map to provide that certainty and boost investment.
New clause 3 speaks to that, and perhaps the right hon. Gentleman would like to join us by voting for it later this evening. It would require the Government to follow our lead by initiating that review of business taxes that we want to see now. Such a review would make recommendations on how to give businesses more certainty about the taxes they need to pay, and how to make sure that the system of capital allowances operates effectively to incentivise investment. The new clause would require the review to be conducted, and recommendations on how to increase certainty and investment to be published, within six months of the current Finance Bill becoming law. I urge Ministers and, indeed, Back Benchers to accept and support new clause 3. If they do not, I at least encourage Ministers to give as much certainty as possible by making it clear what their plans for capital allowances are beyond the three-year period covered by clause 7.
Beyond the capital allowances in clauses 7 to 9, the Bill introduces other reliefs relating to businesses in clauses 10 to 15. I wish to ask the Minister a fairly technical point about clause 10 and its associated schedule 1. As we know, clause 10 introduces changes to the research and development tax relief for small and medium-sized companies and to the R&D expenditure credit, which is mainly claimed by larger companies. The clause widens qualifying expenditure to include data licences and cloud computing services, and introduces new compliance measures. More widely, we are concerned that the Government’s piecemeal and rapid changes to R&D reliefs are causing uncertainty. As we know—we have discussed this already today—such an approach is harmful to the effectiveness of reliefs and does not help the UK’s position in attracting investment. We are also aware, however, that there are concerns that the claim notification measure in this clause may be poorly targeted. Although it will prevent some dubious claims, it may well mean that many genuine claims, and disproportionately those from smaller companies, will fall out of time.
On the detailed changes introduced by clause 10, I wish to ask the Minister a specific question about the wording of a new power for His Majesty’s Revenue and Customs, to which the Chartered Institute of Taxation has helpfully drawn our attention. Paragraph 14 of schedule 1 introduces a new power for HMRC to remove a claim for R&D relief from a corporation tax return when an officer of HMRC
“reasonably believes that a claimant company has failed to comply with a requirement relating to the making of the claim”.
There is no right of appeal against a decision of HMRC made pursuant to this power. It seems that the Government’s intention is for this new power to be used only in relation to the new compliance measure introduced by the Bill. However, it is not clear that the wording of the new legislation itself is limited in that way. To suggest a potential solution to this problem, we have tabled amendment 26. It is a clear and technical amendment, drafted by the Chartered Institute of Taxation, and I encourage the Minister to accept it and make it part of the Bill.
Clause 12 introduces a new investment allowance at a rate of 80% for oil and gas companies for investment in the decarbonisation of upstream petroleum production activities. As Members from all parts of the House will know, Labour has been calling for a windfall tax on oil and gas giants since January last year to help fund support for people struggling with the cost of living. After months of pressure, the current Prime Minister, and other Conservative Members, were finally dragged kicking and screaming into introducing an energy profits levy in May last year. At every turn, however, the Government have left loopholes and weaknesses in their version of the windfall tax, and they have stubbornly refused our calls to address them.
The Conservatives’ refusal to strengthen the windfall tax means that billions of pounds of profits of the oil and gas giants are being left on the table. They are refusing to strengthen the windfall tax on those oil and gas giants while, at the same time, pushing up taxes for people across the country through a 5% hike in council tax. If we were in power, a Labour Government would freeze council tax this year, funded by a proper windfall tax on the oil and gas giants. That is Labour’s fair way to help families through the cost of living crisis. All the  Conservatives have to offer is yet more tax rises on working people. If any Conservative Members agree with us, they can join us in voting for new clause 6.

Caroline Lucas: As well as the economic cost of the way that the windfall tax has been designed, does the shadow Minister agree that it has a massive climate cost, in the sense that we are incentivising oil and gas at exactly the time when we need to make the transition to green energy technologies?

James Murray: The hon. Member is right to point that out that, in addition to the points that I have made, the Government’s decision has a climate change impact. It shows, I think, in the design of the windfall tax that investment allowances really should have no place in a proper windfall tax on oil and gas giants’ profits. We want to scrap those investment allowances and to make sure that that money is spent helping people through the cost of living crisis that we face right now. I would very much welcome the hon. Member and any Member on the Conservative Benches joining us in voting for new clause 6, which will force the Government to come clean about how much money they would raise by strengthening the windfall tax—money that could go towards freezing council tax this year.
I have spoken so far about the clauses of the Bill that relate to the main rates of corporation tax, capital allowances and reliefs. I now turn my attention to another important way that the Bill impacts on corporation tax through parts 3 and 4, which relate to the new multinational top-up tax and the related domestic top-up tax. As I set out earlier, we desperately need greater stability and certainty in business taxes and allowances to help the economy grow in the future. We also need greater fairness to help people with the cost of living crisis right now.
That principle of fairness is crucial in making sure that British businesses that pay their fair share of tax face a level playing field when competing with large multinationals that may not do so. That is why we have, for so long, pressed the Government to back an ambitious global minimum tax rate for large multinationals. We have long needed an international deal on a global minimum corporate tax rate to stop the international race to the bottom and to help raise revenue to support British public services. We welcome the international agreement, fostered by the OECD, that makes sure that large multinationals pay a minimum level of 15% tax in each jurisdiction in which they operate.
As I set out on Second Reading, it has been a long and winding path to get to this point. The Prime Minister, when he was Chancellor, was often lukewarm in his support of such an approach. However, the deal now faces a new front of challenges, as Conservative Back Benchers have begun to be open in their hostility towards the implementation of the deal, as we have seen in this place today. We believe that it is crucial to get this legislation in place, so I hope the Minister can reassure us today that those parts of the Bill that introduce a multinational top-up tax will not be bargained away in the face of opposition from Conservative Back Benchers.
On Second Reading, we heard from the right hon. Member for Witham (Priti Patel) and others as they rallied their colleagues against the global minimum rate of tax for large multinationals. We therefore want to  press the Government to make sure that, in the face of opposition from their Back Benchers, they do not back away from implementing this landmark deal.
That is why we have tabled new clause 1, which would require the Chancellor to report every three months for a year on the Government’s progress in supporting the implementation of OECD pillar two rules. The quarterly reports mandated by the new clause would update the House on the Government’s progress towards implementation. Those updates must include details of what efforts the Government have undertaken to make the rules as effective as possible. They must explain what the Government have done to encourage more countries to implement the pillar two rules—a point made by the right hon. Member for Chelmsford (Vicky Ford), who is no longer in her place. This is important because we know that the rules will be more effective the more widely they are implemented. I hope that the Government will support our new clause, which commits them to giving these updates. Surely that is a matter on which we broadly agree. Even if Ministers do not support the new clause, I hope that many Conservative Back Benchers do.
On Second Reading, the right hon. Member for Witham expressed her concern that the implementation of the OECD rules had so far progressed with “very limited scrutiny”.
Although I know that she and I, and others on the Conservative Benches, may have very different views on these rules and on what they will achieve, surely she and her fellow Back Benchers will not vote against transparency and will not try to block our new clause that simply requires updates to Parliament every three months.

Richard Fuller: The hon. Gentleman is very kind to give way. Personally, I do not have much concern about transparency in the United Kingdom—we do a fantastic job in that regard. I also have no problem with this country implementing regulations. We tend to have a reputation for gold-plating all our regulations. My concern is that other countries will not do what they say they will do. By enacting this legislation, my concern is that other countries will not do so. The hon. Gentleman has been extolling the virtues of supporting British enterprise, but Labour’s approach runs the risk of putting British companies at a disadvantage, because the United States and other countries may not move forward as we introduce these restrictions. He has talked about transparency, but can he specifically say today that, if the United States does not enact this legislation, the Labour party, whether in Government or not, would support efforts for us to renew or review pressing ahead with our own legislation?

James Murray: I thank the hon. Gentleman for his comments. At one point, I thought he was starting to speak in favour of our new clause; I got my hopes up momentarily because he referred to the importance of making sure that more countries implement the pillar two rules, and we agree that that is important to make them as effective as possible. Indeed, new clause 1 says that the statements to the House, every three months of the following year, must include details of efforts by the UK Government to encourage more countries to implement the pillar two rules. On that basis, I hope that he will join us in the Lobby to vote for the new clause later this evening.

Richard Fuller: rose—

James Murray: I am going to make some progress.
Finally, our new clause 2 would require the Government to set out their approach to pillar one of the OECD agreement and the digital services tax. We know that, unlike pillar two, the implementation of which is proceeding both here in the UK and in many countries overseas, the prospects of pillar one being implemented in the near future look less positive. That is likely to have an impact on the Government’s approach to the digital services tax, so I urge the Government to support our new clause, which requires the Chancellor to make a statement to the House on the matter. While new clause 2 has not been selected today, I none the less encourage the Minister to set out the Government’s approach to pillar one and the digital services tax in her closing remarks.
Through today’s debate on the Bill’s clauses and our amendments, we have seen the state that the Government are in. We have seen how they are failing to provide our economy with the stability and certainty that is needed for growth—growth that we need in every part of the country to make everyone, rather than just a few, better off. We have seen how the Government’s Back Benchers risk putting their party before our country at every turn, and how they are unable to provide the long-term plan that people and businesses need. We have seen clearly how this Government are refusing to take fair decisions on taxes—putting up council tax for families across the country, rather than strengthening the windfall tax on oil and gas giants.
When we come to vote at the end of this debate, I urge all hon. Members to support Labour’s new clauses and expose the unfair choices that this Prime Minister and this Conservative Government are making, which are leaving our economy on a path of managed decline.

Priti Patel: I rise to speak to the topic at hand, but I want to begin by thanking the Minister for the way in which she has tackled this Committee sitting and her familiarisation with the points made on Second Reading.
I am on the record as having concerns about not just the implementation but the purpose of all this. No one would disagree that multinational companies need to pay their fair share of tax, but I question the way we are going about achieving that. I put it on the record that I was semi-humoured by the comments of the Opposition spokesperson just now. Even when the Labour party is taking a break from its efforts to heap extra burdens on businesses, which is obviously what it stands for, it is raising concerns about implementation timetables.
Labour has missed the opportunity to speak up for British businesses, so it falls to those on the Conservative side of the House to do that. We believe in competition, business growth and business investment. My right hon. Friend the Member for Chelmsford (Vicky Ford) is not in her place right now, but sectors such as insurance employ my constituents, probably the constituents of the hon. Member for Ealing North (James Murray) and hundreds of thousands of constituents up and down the country. Those are the types of jobs we should try to safeguard in the United Kingdom.
The hon. Gentleman was partisan, so I will make a point now as well: the response of the Labour party is always to build up even more red tape, regulations and reporting. I think we all know how we adopt regulations in this country. My own personal view, which I attested to on Second Reading, is that I would like to have a delay to implementation until we see a critical mass of other countries, including very significant competitors, moving some way towards implementing the tax, as has been said by colleagues this afternoon.
As my hon. Friend the Minister already knows from interventions today and from Second Reading, I feel that this new tax risks placing significant compliance costs on British businesses, which are already paying well above the minimum 15% tax rate. We must recognise that there are current pressures and that these inevitable costs will be fed on to consumers. I have touched on the insurance sector, but at the end of the day it is consumers who will end up picking up the costs through higher premiums and other impacts on them. On top of consumer prices, which bear the brunt of that and are also inflationary, there is no way, given the delays that we are seeing elsewhere, that implementing this tax will not have an impact on our competitiveness. By pressing ahead, we risk capital flight and jeopardising future investment income.
I have a range of questions to put the Minister shortly. I understand the reassurances that she has shared with the House today about other jurisdictions, but we have to be honest with people and say that we are not seeing a mass move towards co-ordinated implementation. That is not happening. We understand that that is down to electoral cycles and all sorts of pressures within other jurisdictions, and I also acknowledge that she pointed to Germany, Spain, Sweden and the Netherlands as having published draft legislation. However, only three EU member states are reaching the stage that we were at last July, and that does not mean they are meeting the parallel process on the timetable for implementation. She also pointed to Japan and Canada; Japan is interesting, because its legislation delays implementation until several months after the UK’s, while Canada is yet to pass its legislation for a whole range of reasons.
We should level with everyone, particularly because we as Conservatives believe in British businesses and the risks they take and know that they look to the Government of the day to give them certainty and support—I will come on to the support side in a moment. We must be clear with businesses about the environment in which we will be bringing in this measure, what it will be like and what it will mean for them. That is even before we come to the problem of the United States, which, as my hon. Friend the Member for North East Bedfordshire (Richard Fuller) touched on, is not implementing pillar two at all, and Singapore and Hong Kong, which are also important jurisdictions for financial institutions and which will be delaying implementation until 2025.
I entirely understand the Minister’s point about the revenue-raising nature of this measure, but, given the delays in key and significant jurisdictions, those revenue  projections are fluid—and I am being polite in using the word “fluid”; we could say they are uncertain, as they already were, but I think we could even go further and say they are probably in jeopardy. We need greater scrutiny of some of the revenue figures.
The Minister has seen the research by the Chartered Institute of Taxation, which has already said it is in doubt whether pillar two will raise the £2 billion annually that the Government are predicting. Perhaps it would be useful for the Committee to get a greater understanding of the projections, the calculations and the insights used in considering this matter, because that institute and others have raised concerns around the figures.
Those institutions also raise concerns about the implementation timelines, which have been the subject of discussion. I would rather see no implementation or see implementation delayed until others look at it. However, since we are using the tool of primary legislation to bring this measure forward, at a time when the matter is still under live international discussion, which could change in months—that is the nature of the world and the markets—we need to understand what it means for British businesses and the complexities that it will bring to them.
On the point of complexity, the Institute for Fiscal Studies recently released its own report expressing significant concerns about that, and many of us made the point on Second Reading about what that means for businesses. No doubt they have an army of tax lawyers, but will this be a perverse incentive? Will it have unintended consequences?
On Second Reading I also touched on significant questions about international dispute resolution, which have still not been answered and which raise considerable concerns. We still have wider concerns about implementation, other jurisdictions, the ways of working and how we will resolve some of those unanswered questions. I urge Ministers to come back on Report with solutions to the points that I have made and others will no doubt make. We really do need to see what this means not just for businesses but for the whole principle of accountability, fairness and transparency internationally.
We have spoken about the European Union and the United States, but the impact on British jobs and businesses is our predominant concern. I raised the whole issue of tax sovereignty. The wider implications of the policy measure for our tax sovereignty have not been unpacked. I have previously touched on the threats to competitiveness, but I genuinely feel right now that, for a country and a Government who believe in free market fundamentals, in having a dynamic economy that embraces free enterprise, and in low and simple taxation, these measures could be regressive—we could actually be going backwards. My right hon. Friend the Member for North West Hampshire (Kit Malthouse) mentioned the infamous tax guide for accountants. When accountants have to follow tomes of guidance, that goes against the grain of tax simplification. I am concerned that part of the Bill really fails to address those issues.
I have one plea for the Minister. She understands that this Finance Bill has such a significant section dedicated to international taxation—the OECD rate of taxation—so I urge her to reflect on the comments that I and many others have made, which very much come from industry. I and many colleagues wrote to the Chancellor before the Budget back in March with a range of concerns. We  have not yet even had a response to that letter. I think it is important that we see proper, considered responses to all the concerns that we have raised—that is absolutely appropriate. Before jumping headlong into implementation without proper timescales, without thinking through the consequences of what the provisions mean and with other jurisdictions acting independently and changing their own legislative parameters, will the Minister come back to this House with significant answers to my questions?

Rosie Winterton: I call the SNP spokesperson.

Kirsty Blackman: It is a pleasure to take part in a Finance Bill Committee of the whole House. I will raise a number of points, particularly in relation to the new clauses and to what the Minister said about them.
The right hon. Member for Witham (Priti Patel) mentioned tax simplification. During later consideration of the Bill, we will raise questions about the removal of the Office for Tax Simplification, what has happened to the Government’s assessment of the benefit of that office, whether we will have an issue with removing that office, and whether there will be a cost to the public purse or to businesses as a result of.
We will support Opposition new clauses 1, 3 and 6. We would also support new clause 10 if it were pressed to a vote. I will talk a little about new clauses 6 and 10 on requests for transparency. It is incredibly important that we have transparency about how allowances, tax and everything else put in place by the Treasury—and, in fact, by every Government Department—work. The Red Book that is produced at Budget time gives us a genuine idea and expectation of how much any measure—be it an investment allowance, a new tax measure, or something else—is expected to generate, but the UK Government are not terribly good at putting in place post-implementation reviews of such tax measures.
We do not have enough transparency on whether the tax measures put in place have actually achieved what the Government intended. In fact, I tabled a written question on this some time ago, and various Government Departments were unable to tell me even how many post-implementation reviews they had carried out and whether there were any that they had not carried out. It seems to me pretty fundamental that the Government should fulfil their role of calculating the cost or benefit and saying whether the projection has seemed accurate. It is all well and good for the Government to say, “This is going to raise £100 million,” but if they do not then assess whether it did, how can we be sure that a measure had the desired effect, particularly when it is something such as an investment allowance? We are not saying, “We don’t think there should be allowances”; we are saying, “We want the allowances that are put in place to actually work in the way that they are intended to work.” I have concerns about that.
New clauses 6 and 10 would require the UK Government and the Treasury to provide transparency on the allowances and their resulting outturn. It is particularly important to look at our climate change obligations. In fact, we have tabled an amendment specifically on looking at the entire Finance Bill through the lens of whether it will  help us to meet our climate change and Paris agreement commitments. There is no point in this House agreeing to legislation that takes us further from the Government’s stated aims and legislative commitments on climate change. I am still of the opinion that the UK Government are fairly good at talking the talk on their climate change commitments but not at translating that into checking whether our climate change objectives will be hampered by the policies that are put in place.
During the Committee stage of the Advanced Research and Invention Agency Act 2022, for example, I requested that the new organisation be set up on a net zero basis from the beginning. Given that we have net zero targets, I do not think that it is unreasonable to ask for any new Government department to be set up on that basis and, at least, to not contribute in a negative way to our carbon outturns. As I said, we will support new clauses 6 and 10 if they are pushed to a vote.
New clause 8, which relates to clause 10, addresses the R&D spend on data and cloud computing. We have tabled a probing amendment on that, and although we do not intend to press it to a vote, I would appreciate it if the Minister were able—either today or at a future stage—to answer some questions. We have particular concerns about clause 10 as it relates to part 2 of schedule 1. The explanatory notes—a hefty document—state that:
“Expenditure on data licences and cloud computing services only qualifies for relief to the extent that the commercial use of that licence or service is restricted to the particular research and development activity to which the claim relates, and that the customer does not have a right to…ongoing use after the relevant research and development has ended.”
I appreciate the Government’s intention, but we have tabled new clause 8 because we are concerned that this will hamper anyone applying for the allowance in the first place, as they may want to continue to use that data licence and cloud computing after the research and development. Surely they are only doing the research and development because they think it will be profitable and positive for their company. I am concerned that they may choose not to make the investment or to apply for the allowance if they know that they will have to pay it back at a later stage if this does what the company surely wants to achieve, which is to make money.
This could have been done in a different way, by allowing companies the investment opportunity and the R&D allowance for the data licence and cloud computing, and then stopping the allowance at the point at which it begins to make money, rather than saying, “If this does begin to make money, you have to pay us back.” It would be great if the Minister could answer questions on that issue today, but if not, I am happy to receive information afterwards, so that we have clarity on the Government’s assessment of this.
The Minister mentioned the Prime Minister’s stated aims in relation to inflation targets. I appreciate that these are aims to reduce inflation, but the reality for our constituents is that there will still be inflation—although the rate will drop, we will still have inflation, with prices going up. Given that there has been a massive increase in the price of food particularly, which went up 17% at one point, and in the price of energy, our constituents will still see the lower rate of inflation levied on current  prices, so they will still see the price of pasta increasing, and they cannot avoid buying staples such as pasta and rice. I am concerned that the UK Government are not taking this seriously enough.
At this moment, my hon. Friends the Members for Glasgow North East (Anne McLaughlin) and for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) are finishing up a drop-in session on the concerns of their constituents and all our constituents about energy prices. Again, I am concerned that the UK Government have not done enough; we have been saying that for a significant period and calling for individuals’ bills to be reduced. It seems like more could be done by the UK Government to protect our constituents. It is appreciated that there has been some protection in place, but the reality for people coming through the door of our surgeries is that their energy prices have increased significantly and their wages have not kept pace, and they have far less disposable income as a result.
In Scotland, we look at all decisions, and in particular financial ones, through the lens of wellbeing. I appreciate that the Government have targets in relation to inflation. They also have targets in relation to fiscal rules. The International Monetary Fund announced in the last couple of weeks that two of the main fiscal rules will be missed. If there are to be rules in place, we should have better rules, and we should actually meet them. If we look at decision making through the lens of ensuring individual and community wellbeing and meeting climate change targets, we end up in a situation where everybody is better off, rather than having fiscal rules that do not actually translate into my constituents’ outgoings at the end of the month and that are not being met anyway as a result of the decision-making process.
We know that a major factor that has created the situation the UK finds itself in, almost uniquely, is the loss of single market access and Brexit. It is also to do with the reduction in immigration that we are seeing because we do not have the freedom of movement that we did previously, and therefore we are struggling to fill an awful lot of the jobs that would have been filled by people coming from the EU, a significant number of whom have left as a result.
We will move a number of amendments in Committee. We do not intend to push new clause 8 to a vote, but we would appreciate more conversation with the Minister on our concerns about that issue. We will be supporting new clauses 1, 3, 6 and 10 if they are pushed to a vote.

Jacob Rees-Mogg: It is a great pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman), although I must say that there was some irony in a representative of the Scottish nationalist party speaking in favour of following financial rules, which sometimes seems not to happen in that part of the United Kingdom.
Of course, like everyone else here, I am a taxpayer, so we all have to declare some element of interest, and I am a corporate tax payer, under a particular hat, so I have an interest in the subject. Today—perhaps suitably, for what we are discussing—is the eve of the feast of St Alphege. Hon. Members will recall that St Alphege was murdered for refusing to pay higher taxes. He was, in many ways, the first tax martyr, who, reluctant to pay an additional Danegeld, had ox bones thrown at him until he was dead. I fear that, under current circumstances and with the approach taken by those on both Front  Benches, we see endlessly higher taxes, and we are having metaphorical ox bones continually flung at us. Let us hope that we do not get martyred through it.
It is appropriate to think of St Alphege, because we are debating the worst bit of the Budget today, turned into law. It is the bit that will be most damaging to the economy, and it is the bit that is least in the interests of the United Kingdom. Let us start with clause 5, which is an historic mistake—it is a major blunder being made by His Majesty’s Government, and it fails politically and economically. It is worth remembering why the then Chancellor, George Osborne, started to reduce corporation tax. He got the Treasury for the first time to do a dynamic assessment of the consequences of cutting a tax. What did that dynamic assessment show? It showed that more revenue would be raised, which is precisely what happened. More revenue came through, both in actual, nominal cash terms and as a percentage of GDP. That cannot just be ascribed to general economic improvement and growth: it was a fundamental change in the level of corporation tax raised at a lower rate. Why was that? Well, it made the country more competitive, it encouraged people to set up businesses, and it created a system where people thought that the United Kingdom was open for business. What we are doing now is the precise opposite.
In her opening remarks, my hon. Friend the Minister referred to our noble Friend the late Lord Lawson—most distinguished Chancellor, most effective Chancellor—but this goes against everything that he did as Chancellor. In every single Budget that he presided over, he managed to abolish one tax. Why? Because he realised that simplification of the tax system was the right way to go, and because he realised—we saw more of this in the United States during the same period—that lower rates with fewer write-offs is a better way to go than higher rates and complex write-offs. Today, His Majesty’s Government are doing the exact opposite, because the Government think that they know how businesses should spend their own money better than businesses do themselves, which is fundamentally wrong.
As such, we get a raise in the basic rate, which will hit small businesses. It actually hits them at a higher marginal rate, because between £50,000 and £250,000, it has to make up the 19% to the 25%. As people get their business out of the foothills and begin to climb the mountain, we start hitting them with a high marginal rate, which is not particularly clever. Then we say, “You, dear business, do not know how to spend money—you are far too stupid—so we will tell you how”, which fundamentally misunderstands the British economy. It may be that we were a wonderful manufacturing economy in the 19th century. I love the 19th century; I have great affection for the 19th century. Some people accuse me of being the hon. Member for the 19th century—I would point out that it is the right hon. Member, and it may be earlier than that, but never mind. However, that is not the economy we have now. Our economy is primarily a service economy, and providing complex write-offs for investment that benefit manufacturing but hit services does not understand where our economy is based.

Simon Clarke: I agree with my right hon. Friend. I would add that, even for the manufacturing sector, we are obviously facing an extremely concerning tax  situation—I refer him to AstraZeneca’s recent decision to locate in the Republic of Ireland rather than the UK. It is absolutely imperative that we lower our corporation tax rather than raise it, because that is ultimately the key test of our competitiveness.

Jacob Rees-Mogg: My right hon. Friend is right, and for once, those on the Opposition Front Bench were right as well. Part of the problem with the write-offs is that they are temporary, but why are they temporary? Not because that is what the Government want to do, but because the Government are in hock to the OBR, which gets all its forecasts wrong. All the OBR has managed to say about the write-offs is that they will bring forward investment. That is not a bad thing in and of itself, but the long-term benefit is not being achieved because we insist on following what a bad forecaster tells us will happen. Actually, to the credit of the bad forecaster, it admits that what it says will happen will not happen, so we are doing something on the basis of something that even the forecaster says will not be the case when the years have passed. That cannot possibly make sense. We are making it more difficult to do business in this country, and our aim should be lower rates and fewer write-offs. That is the way to encourage business, and it is the way to grow the economy. If we grow the economy, we can afford the public services that we want. At the moment, we are risking shrinking the economy, encouraging business to leave and set up elsewhere and not having the money we need for public services. Clause 5 is a bad clause; it is a bad thing to be doing, and it is a bad thing for the British economy.
I would go further, because this idea that attacking corporations is a free lunch for Governments is a mistake. Corporation tax is of itself a bad tax, because it is not a tax that falls on nobody; it actually falls directly on consumers. It comes through to consumers, because businesses thinking of operating in this country do not care about their gross margin; they care about their net margin. When the corporation tax rate goes up, what do they do? They say, “We either have to increase prices or reduce employment to maintain the net margin.” Increasing corporation tax from 19% to 25% in a period when there is already inflation in the system will be more inflationary, as multinationals will raise their prices to compensate and maintain the net margin, or they will reduce employment, which makes the cost of living crisis worse for people, because people’s incomes then fall when they are trying to deal with rising prices.
I fear that there is a view among politicians that we tax corporations because they do not vote, and it is therefore an easy raid to make and therefore it does not matter. It is the old saw about plucking the goose with the least amount of hissing. Unfortunately, the hissing on corporation tax is delayed, but all taxation ultimately falls on individuals, and that is true of corporation tax. That is why it is a bad tax and why increasing it is  a mistake in these current circumstances—indeed, it is a mistake in almost all circumstances.
The multinational minimum tax is also a mistake, and it is a mistake in terms of diplomacy and foreign policy. It was a daft thing to agree at the G7. We had no interest in doing it, and my hon. Friend the Minister said that they have all done it in the EU, as if that was meant to be any salve or balm in Gilead for us anyway. The fact that the high-tax, highly inefficient, highly  regulatory EU is keen on it is enough to make most people reach for the smelling salts, rather than to think it is some glorious success of His Majesty’s Government. Why is it a bad idea? It is a bad idea because it deprives us of ambition. My right hon. Friend the Chancellor himself called for corporation tax to come down to 12.5%, and we are now legislating to make his ambition impossible. That is not something that Governments usually do; they normally try to ease their way through to something that they have set out, even if they recognise that the circumstances are not immediately possible in which to do it.
The other reason that the tax is wrong and deprives us of ambition is that it is about settling for a high-tax, inefficient world. I think Angela Merkel, the former German Chancellor, said, “We have a system where we have all this welfare, and other countries do not. How are we going to carry on paying for it when they are so competitive?” That is a quotation from her from a few years ago. We are trying to make the whole of the rest of the world as uncompetitive as we have allowed ourselves to become. That is surely not the answer; the answer is to make ourselves more competitive and therefore to have and to be able to afford lower taxation. Instead of looking at those countries that have low-tax regimes as pariahs, we should look at them as models. Instead of saying that Ireland with its low tax rate is doing something scandalous and should be punished, we should say, “No, Ireland has got more from corporation tax than it gets from value added tax.” We do not get a fraction of the money from VAT and corporation tax, because we have a much higher rate, and we have not attracted the businesses that Ireland has attracted.

Richard Fuller: I am somewhat sorry to interrupt my right hon. Friend, but I am interested in his views on international competitiveness. One of the issues that the Minister mentioned in relation to the application of global minimum tax is that it will affect companies that have a large amount of their asset base in intangible assets. Those are primarily in the more advanced countries—western democratic countries—which will find it much harder to justify some of the deductions they can make from the amount of tax they will be subject to under that global minimum tax. What is his consideration of the global political impact of that on the competitiveness of our advanced economies versus China, and of the other implication about the valuation of pensions, many of which are invested in companies that will be disproportionately affected by this legislation?

Jacob Rees-Mogg: My hon. Friend is absolutely spot-on that intellectual property rights are, of their nature, much harder to tax, but they clearly belong in the country that invented them or that owns the intellectual right, which is a saleable asset. If that is in a low-tax jurisdiction, why should it be taxed at a falsely high rate? If Disney makes a plastic toy in China, where is the value? It is not actually in the plastic toy being created; it is in the fact that millions of people like watching Disney characters. Trying to locate where that tax ought to be paid is therefore an extremely complex issue, and not one that is solved by a minimum tax. All that does is make it less efficient for companies to invest, develop and do things here, and they might as  well do that somewhere else. They might as well do it in China, actually, because China does not seem to be very enthusiastic about this minimum tax anyway.
I do not think this will succeed in stopping complexity. Indeed, it adds to the complexity of the system, and we need only look at this Finance Bill to see by quite how much. The Minister, to her credit, did admit this, and said it was so important that we debated it, with which I thoroughly agree, but the dozens of pages of clauses and schedules on this are making our system fundamentally more complex.
My right hon. Friend the Member for Witham (Priti Patel) raised the issue of tax sovereignty. We got into a terrible muddle by signing up, in the European Union, to a minimum rate for VAT. We thought at the time it was a success, because the EU wanted to be able to set a unified rate, and we got just a minimum rate agreed. However, that led to suddenly finding that it was impossible to lower VAT rates, as we discussed during the Brexit debate, and as we still cannot do in Northern Ireland, where we are stuck with VAT rates still being set according to the minimum agreed in the European Union. So we remove flexibility, remove sovereignty, increase complexity and make it less competitive for business, and we are selling the pass on becoming a tax-efficient, tax-competitive country.
Tax competition is a good thing for those of us on this side of the House, who are meant to be capitalists. I accept that the socialists do not want it, and that is fair enough—that is what they believe in—but we believe in growing economies through free-market solutions. Therefore, we believe that if we have a lower tax rate than Germany, that is a good thing because it makes our economy more competitive and makes the British people richer than the Germans. That is not something we are achieving currently, but that I would like to achieve, Mr Evans—the independent Chairman seemed to be nodding at that, but I am sure that Hansard will take no notice of his agreement that we ought to be richer than the Germans.
This is about a failed economic orthodoxy of an undynamic kind that is leading to the increase in corporation tax, when the evidence from George Osborne showed that that is not true, so clause 5 is a mistake. Then the multinational minimum tax is about making globally the rest of the world as inefficient as the European behemoth has become, and that is the wrong approach to be taking. Where is our ambition, where is our vision and where is our free-market approach?

Several hon. Members: rose—

Richard Fuller: On a point of order, Mr Evans. For complete transparency, I just mentioned a point about intellectual property, but I did not mention that I have recently resumed a position as an adviser to a technology investment company. Actually, it is so new that it has not yet appeared in the Register of Members’ Financial Interests. It would not be affected by global minimum tax, but I thought I should make that clarification.

Nigel Evans: That is on the record. Thank you very much.

Sarah Olney: I rise to speak on behalf of the Liberal Democrats to new clause 7, tabled in my name, which would require the Government to produce an impact assessment of the effect of changes to small and medium-sized enterprise research and development tax credits on the UK tech industry and on long-term economic growth.
The Conservatives’ constant flip-flopping on tax and investment rules and their badly targeted incentives have not achieved the growth they promised, or are promising. Just last week, the International Monetary Fund predicted that the UK economy would contract by 0.3% this year, making us the worst-performing major economy. Prolonged weakness in business investment and productivity are a major barrier to economic growth, and if the Government want to boost innovation and drive long-term sustainable growth, they need to implement effective and well-designed policy on tax and investment.
The Federation of Small Businesses calls research and development tax credits for SMEs the most effective industrial policy of the last 10 years, enabling small businesses to develop cutting-edge products and foster competition and innovation within industry. The Government’s decision to dramatically slash R&D tax credits has therefore come as a blow to thousands of businesses. The Chancellor’s new policy of targeting tax breaks at research-intensive firms has been celebrated by the life sciences industry, but many other industries will fall outside the 40% intensity threshold. The Institute of Directors has also warned that targeting tax credits at research-intensive firms could lead to less innovation across the economy more widely.
We need to incentivise companies across all sectors to innovate, and particularly to encourage those that have not habitually been innovators. The manufacturers’ organisation Make UK has warned that further damage has been caused by the Conservatives’ chopping and changing on tax credit policy, which leaves businesses struggling to keep up and weakens business confidence. On Second Reading I urged those on the Treasury Bench to reconsider their policy and to reinstate the R&D tax credits for SMEs in full, and I am disappointed to see a lack of movement in that area.
The Liberal Democrats would introduce the kinds of incentives that have been proven to boost productivity, such as tax breaks for training to ensure that employees can continue to develop their skills, both for their own benefit and for the benefit of their employers; allowances for digital investment, to enable businesses to invest quickly and early in the newest digital tools in order to make productivity gains; and, most importantly, encouraging proper, ambitious, bold investment in energy efficiency. Whether for switching a fleet to electric cars or installing solar panels, reducing demand for energy is essential not only for decarbonising our industrial sector, but for bringing down production costs.
The need for targeted incentives for energy efficiency has been underlined by the ongoing energy cost pressures that businesses are experiencing, and the Conservatives’ decision to slash energy support for businesses by 85% will force countless shops, pubs and restaurants to pass increased costs on to their consumers, further fuelling inflation. The Liberal Democrats have repeatedly called on the Government to do more to tackle rampant inflation by supporting businesses with their energy bills. Amidst Government inaction, last month the rate  of inflation in the UK jumped to 10.4%, driven largely by the cost of food and alcohol in hospitality venues. I urge the Government to look again at their policy on energy support and tax incentives offered to business, to tackle inflation, to stimulate economic growth and to drive productivity across all sectors.

Kirsty Blackman: The hon. Lady is making an important speech on new clause 7. I did not mention this in my speech, but we will support the new clause if it is pressed to a Division today.

Sarah Olney: I welcome the Scottish National party’s support for our new clause.
I ask the Government to accept the Liberal Democrat amendment proposing an impact assessment on the changes to R&D tax credits. It is essential that this policy is kept under review and its impact on the UK’s tech industry and long-term economic growth is monitored if we are to ensure that the UK becomes the powerhouse of technical innovation it so badly needs to be if we are to drive the productivity we need to increase growth across all economic sectors.

Caroline Lucas: I rise to speak in support of new clause 10, which stands in my name and addresses the decarbonisation allowance first announced by the Chancellor in the autumn statement and now legislated for in this Bill. Although in principle the decarbonisation allowance may sound innocuous or even useful, it is in fact an outrageous subsidy that sees the taxpayer paying companies to decarbonise their activities.
Under this scheme, a company spending £100 on so-called “upstream decarbonisation”—in other words, reducing emissions from the process of extracting oil and gas that then goes on to be burned—is eligible for £109 in relief. We should remember that these companies have themselves admitted that they have
“more cash than we know what to do with”,
and earlier this year they recorded obscene, record profits, with BP’s profits more than doubling to £23 billion and Shell reporting annual profits of more than £32 billion, all while millions of UK households face unbearable choices between basic needs and desperately struggling to make ends meet.
In his Budget statement, the Chancellor recognised what he called the enormous pressures on family finances, with some people remaining in real distress, yet even with the decision to freeze the energy price guarantee at £2,500 as of this month, bills will still rise by almost 20% and 7.5 million households will be in fuel poverty. It is utterly perverse that in this context the Government have decided to hand the climate criminals—those who have profited from the spoils of war—yet another subsidy. These are, at bottom, political choices.
The Chancellor may say, in response to my amendments, that we should be endorsing the decarbonisation allowance to cut emissions from the oil and gas sector, but that ignores the economic reality of the situation and the reality of our planetary boundaries, with upstream decarbonisation doing nothing to mitigate the end result of the fossil fuels choking our precious planet. I am afraid that, in the face of worsening climate impacts, paying companies to power oil rigs with wind turbines or to monitor emissions to detect leaks simply does not cut it. Even more alarming is the provision in the Bill for the decarbonisation allowance to support carbon  capture. That UK taxpayers would pay oil and gas companies to capture their emissions in order to allow them to continue production—essentially, to continue business as usual—is a shocking violation of the “polluter pays” principle.
If the Government were seriously looking at reducing production emissions, they would, for example, be looking to bring forward an outright ban on flaring by the end of 2025 at the very latest—I remind Members that flaring has been banned in Norway since 1971—or they would be strengthening the lamentable targets in the North sea transition deal from a 50% reduction in emissions by 2030 to at least a 68% reduction, as proposed by the Committee on Climate Change in its balanced pathway, both of which have been called for by the Environmental Audit Committee, of which I am a member. Yet in their response to the EAC’s report on “Accelerating the Transition from Fossil Fuels and Securing Energy Supplies”, the Government roundly rejected both recommendations, maintaining that the existing targets in the North sea transition deal are “sufficiently ambitious”.
This is not a Government who are serious about cutting emissions from production, and they are certainly not serious about the climate crisis. New clause 10 recognises that the decarbonisation allowance is just one of the handouts to fossil fuel companies that have been introduced under the energy profits levy. It would require the Government to produce an assessment of the cost of the decarbonisation allowance to the Treasury and, crucially, its impact on overall investment in oil and gas production. It would also reveal how much money would be raised through the energy profits levy without the enormous gas giveaways in the form of both the investment allowance and the decarbonisation allowance, as well as assessing their impact on delivering our crucial climate targets.
At this point, I would like to say a few words in support of new clause 6, which would require the Chancellor to conduct a review of the decarbonisation allowance and its impact on public finances, although it is important to note that the amendment is somewhat narrower in not requiring an assessment of climate impacts as well. The Government are very transparent about the fact that the investment allowance is directly aimed at encouraging companies to pump more money into oil and gas extraction in the UK by allowing them to claim £91.40 for every £100 invested. That policy runs directly counter to the advice of the world’s leading scientists on what is needed to keep 1.5° within reach, with the UN Secretary-General calling for a cessation of
“all licensing or funding of new oil and gas”
at the recent launch of the Intergovernmental Panel on Climate Change’s “AR6 Synthesis Report”, and the report itself being clear that emissions from existing fossil fuel infrastructure already exceed the remaining carbon budget for 1.5°.
The bottom line is that our climate simply cannot take any new oil and gas licences. As I have said time and again, new licences would also fail to deliver energy security. With the oil and gas sold on global markets to the highest bidder, they will not bring down bills in the UK and will inevitably come at a huge cost to the taxpayer. Indeed, if we take just one example, Rosebank, the UK’s largest undeveloped oilfield, the costs become  clear. Rosebank is enormous. At triple the size of the neighbouring Cambo oilfield, it would produce more emissions than 28 low-income countries combined or, to put it another way, it would produce the carbon dioxide equivalent of running 58 coal-fired power stations for a year. If developed, its owners will be gifted a £3.75 billion taxpayer-funded subsidy from the Government to the estimated £4.1 billion project. The Norwegian state-owned company Equinor, which made a staggering £62 billion last year, contributed just £350 million while pocketing enormous profits.
The total cost of the investment allowance to the taxpayer has been calculated at a staggering £11 billion. That is enough to give an inflation-matching pay rise  to every NHS worker and teacher for a year. On decarbonisation, Equinor has said that it will invest £80 million to ready its production vessel for electrification, meaning that the firm would get £87 million in saved taxes. That is just ludicrous. The full cost of powering Rosebank with clean electricity would run into the hundreds of millions, but thanks to the decarbonisation allowance, that now risks being borne by UK taxpayers.
If the Chancellor cannot see the problem, he is simply not paying attention. I ask him and the Treasury Front Bench team, in all seriousness, to scrap not just the decarbonisation allowance but the investment allowance and, instead, to bring forward a windfall tax worthy of its name. Failing that, I ask that they please accept my amendments, which would at the very least give us transparency over the costs of these policies both to the taxpayer and, crucially, to our planet.

Emma Hardy: What an interesting debate it has been. I have found myself slightly amused numerous times by comments from Conservative Members, especially when have they tried to make out that theirs is the party of low taxes, when taxes as a share of GDP are heading to a post-war high. The public are not stupid. A recent poll in The Spectator showed that the public associate the Conservative party with higher taxes. The reason is that the Conservatives keep putting their taxes up.
Another problem that I have seen play out this afternoon as I have sat here is that the Conservative party is inherently divided. Different parts of the governing party are pulling in different directions. That is seen in the seven Chancellors we have had since 2010. As different factions have taken over the leadership, those seven Chancellors have pulled the party in different ways, creating uncertainty. Uncertainty is one of the key things that businesses say leads to a lack of investment. It is not just businesses telling us of the problem of uncertainty, but economists. They tell us about the difficulty with uncertainty and why the UK is uniquely impacted by a lack of investment.
Torsten Bell said that if we go back to 2010 when the Conservatives first came to power—13 long years ago—we initially see a relatively good bounce back from the financial crisis, but then
“we basically miss out on all of the investment growth that other countries saw in the second half of that decade. We flatlined, everyone else soared. In so far as there was a global boom going  on, that is when it happened. We did not see that. There have been some revisions to the data recently that make the bounce back from the pandemic on business investment less grim than they looked before, but they are still pretty bad.”
That is one economist. Another economist, Professor Coyle, said:
“Tax will make a difference, but it is not the only thing that matters, and surveys of employers tend to highlight poor infrastructure”—
something that anyone who spends any time travelling by rail around the north is only too aware of—
“and lack of skills, which we’ve already been talking about. Lining up all the different things that matter is obviously part of the challenge—so, consistency”—
that word again—
“and making the system work as a whole.”
Another economist, Paul Johnson, said:
“The lack of consistency in policy is clearly a problem. Something that we talked about—perhaps it is not the right place to talk about it—is that the political instability is a problem for companies looking to invest”.
Seven Chancellors and a divided governing party that does not know which direction to take the economy and our country. Businesses are seeing that, voting with their feet and choosing not to invest in the UK. Professor Coyle went on to say:
“If you look at the past decade or so, what has been happening to firms, even within a given industry, is that the dispersion of productivity has increased. There are some very productive firms. Their productivity growth has slowed down, but they are pulling further and further ahead of…the rest. Firms that are operating outside London and the south-east tend to be the ones in the low productivity part of that distribution.”
As we have said before, the issue goes back to infrastructure. The constant under-investment in Northern Powerhouse Rail, with different Prime Ministers making decisions about whether we will or will not have it, will have an impact on business investment and influence whether businesses choose to invest in our country.
Professor Coyle went on to say:
“I do not mind whether it is called an industrial strategy or not, but we need some kind of long-term perspective—some kind of strategic approach to managing the economy.”
Hear, hear, Professor Coyle. I agree and so does the Labour party, which is why the Labour party has a long-term plan for growth in the country and why I am speaking in support of new clause 3. If businesses cannot have certainty from the governing party or understand which Chancellor is going to introduce which measure in what way, or which faction is the latest to take over the governing party, then they need that certainty from the Labour party, because they are really struggling.
I have met with local businesses in my constituency and they gave me a very clear message: it is incredibly difficult. The Chancellor may boast—boast, ha!—that we are not in a technical recession, but try telling that to the small businesses in my constituency that are finding life incredibly difficult. As we walk around different high streets, we can see the number of shops that are closing. Although the review of business rates does not go as far as the Labour party wants—we want to get rid of business rates altogether—hopefully Members from across the House can support such a fundamental review. Let us look at what we can do to support businesses, especially small businesses. I am sure each and every  one of us has been lobbied hard by the Federation of Small Businesses and heard directly from small businesses about how difficult they are finding things.
I will comment briefly on new clause 7 about research and development tax relief, which is proposed by Liberal Democrat Members. It is well worth reading the TaxWatch report into the levels of fraud associated with R&D tax reliefs. We may want to support businesses with R&D tax reliefs—I am not saying that we should not do that—but we need to take the issue of fraud more seriously. The OBR predicts that the total cost of R&D reliefs will increase from £6.8 billion in 2021 to £9.2 billion in 2026-27, but fraud and error in that scheme totals over £1.1 billion in the last three years.

Sarah Olney: The hon. Member makes an excellent point about fraud and error. Does she agree that removing the tax breaks entirely is a sledgehammer to crack what is ultimately quite a small nut? Further attempts to crack down on fraud and error would be a much more constructive way to approach the issue she raises, rather than scrapping the tax relief entirely.

Emma Hardy: I never for one moment suggested we should scrap the tax relief entirely, but we definitely need to do something about fraud. When we have businesses ripping off the taxpayer for £1.1 billion—money that is desperately needed for our public sector, hospitals and infrastructure—we need to take the issue seriously and not brush it under the carpet. R&D claim firms continue to hard sell opportunities to claim refunds, often to companies that should not qualify.
We have issues with the tax gap, which is around £32 billion. That tax gap continues to increase and the tax fraud gap stands at £14.4 billion. That is a heck of a lot of money. If they were serious about wanting to reduce taxes, I would have thought Government Members would want to tackle tax fraud. I have raised the issue with the Minister in a previous debate and I know she is aware of it, so will she outline the steps being taken by HMRC and HM Treasury on the important work of reducing tax fraud and simplifying our tax system?
While we are talking about tax simplification, and as a teaser for the debate tomorrow, it seems strange that the Government wish to abolish the Office of Tax Simplification. That seems a rather strange thing to do when they seem so keen on having tax simplification, but maybe we can continue that discussion tomorrow.

Douglas Chapman: I always wondered how the Conservative party did its policy development, but I think the right hon. Member for North East Somerset (Mr Rees-Mogg) has helped me to come to a conclusion. My sympathies therefore go to the Minister.
This Finance Bill is yet another glaring example of the UK Government trying to shove a square peg into a round hole for the people of Scotland. They are desperately trying to fix economic problems of their own making, but their Bill will do the square root of zero to fix the enormous productivity and labour supply challenges that our nation faces as a result of their mismanagement.
I know that the SNP is often seen as a force for positive general happiness around this Chamber, but there is a great black cloud of gloom and doom overhanging the Bill. It relates to Brexit: the unwelcome guest at the  wedding, the elephant in the room, the truth that dare not be spoken by its instigators. Brexit has brought us headlines such as “Economy in decline”, “No-growth Britain”, “Bottom of the class at the G7” and “Export exodus”—hardly what we would call sunlit uplands, and not a unicorn in sight.
Did Scotland vote for this? No, we did not. We did not want Brexit, but it was forced upon us. Meanwhile, the Prime Minister seems to be contradicting his own ideology by remarking on all the special and exciting opportunities for Northern Ireland from access to the EU and UK markets. He does not even realise the irony of his comments or the gross unfairness to Scotland, which has been left in the lurch, with our democratic mandate ignored.
The Scottish people know that this is a Government in denial, with a double whammy of Tory ineptitude on the economy and a damaging Brexit that cannot be fixed by a Finance Bill produced by the same team who were behind that not-so-winning combination. With the economy contracting, according to the International Monetary Fund, and with the Chancellor failing to meet his two main fiscal targets of a falling public debt burden and borrowing below 3% of GDP by 2028, we now know that workers in old Blighty are £1,300 worse off as a result of Brexit. The IFS has stated that our productivity and economic output will fall by 4% as a result of leaving the single market, leaving workers significantly worse off and public services at the thin end of the wedge again, with less money in their budgets. We need less “Better Together for Scotland” and more “I’m Scottish…Get Us Out of Here PDQ!”
I turn to our amendments. I hear from small and medium-sized businesses in my constituency and across Scotland that they are struggling as a result of the economic decline. They are fighting a war on all fronts with energy costs and the costs of doing business, not to mention that they are still trying to get back on their feet after the pandemic and are dealing with the new red tape generated by Brexit.
I am happy to support SNP new clause 8 on extending relief of R&D expenditure for our excellent and important data and cloud computing services. On research and development, the refrain that I hear on repeat from businesses is that they are keen to invest but have their hands tied behind their back. Looking at the clauses before the Committee today, it is easy to see why the Conservatives have lost their “party of business” strapline. So many businesses are reporting that they feel abandoned by this Government and left to float alone, without a life raft to get them out of the swirling morass of the economy and into better times. If the Government want growth and prosperity, they need to listen—really listen—to the people at the coalface who do business every day and who have faced years of knocks and challenges.
On corporation tax, the Government do not seem to know whether they are coming or going. One minute, corporation tax rises seem to be in vogue; the next minute, they are not. The Government swither and dither, but the business community desperately needs stability, security and some long-term plans that will give it the space to breathe and grow.
The ever-present climate crisis is a threat not just to business, but to people’s livelihoods. The UK Government have not shown their best colours when it comes to ensuring that their legislation is in line with the climate  challenges. Despite the climate-induced weather events in the UK and abroad, the Prime Minister left out tackling climate change and reaching net zero from his core priorities for his growth strategy. With the number of elephants in the room, No. 10 and No. 11 are getting pretty crowded.
We cannot pretend that Brexit and climate change are not devastatingly bad for business and for people’s finances. Without acknowledging the catastrophic damage that they bring, we cannot move forward with a comprehensive plan. The Chancellor can present as many Finance Bills to Parliament as he wishes, but these are people’s real lives, real livelihoods and real futures, uncushioned by wealth and privilege, and catastrophically unsupported by a tin-eared Government who refuse to look at the reality of the situation that they themselves face. It is time for Scotland to make a swift exit, and I hope that in the coming months we can achieve just that.

Nigel Evans: I call the Financial Secretary to the Treasury to wind up the debate.

Victoria Atkins: I thank all Members for a most interesting debate. It is not often that the public—if people have been watching this debate—are able to see us scrutinise measures in this way. Committee debates often take place in rooms off the Committee Corridor, and although they are sometimes available for public consumption, it is very helpful when they happen on the Floor of the House. I am genuinely grateful to all who have contributed.
I am afraid I cannot resist picking up, very gently, the points made by Opposition Members about the role that my hon. Friends have been playing during this Committee stage in scrutinising legislation. This is exactly what Members of Parliament are supposed to do. Their job—your job, dare I say it to Members—is to scrutinise our legislation, and I welcome that. It may well be that Opposition Members have highlighted a fundamental difference between the Labour and Scottish National parties and the Conservative party: we have the intellectual self-confidence to hold these debates, and to debate policy. [Laughter.] Opposition Members may laugh, but we know how difficult internal debate has been in the Labour party. It has meant inquiries by the Equality and Human Rights Commission, it has meant a Labour MP being protected by the police in order to attend her own party’s conference, and I understand that a member  of that party is currently being ostracised because her views on what a woman is differ from those of the Leader of the Opposition. So we on this side of the House do welcome debate, and we are able to conduct it properly and professionally within the rules of this Chamber.

Kirsty Blackman: rose—

Victoria Atkins: I will not give way, because I know it has been a busy day for the SNP. [Interruption.] I will not say any more.
My right hon. Friend the Member for North West Hampshire (Kit Malthouse) rightly raised the subject of the corporation tax increase, but so, significantly, did  Opposition Members. They have made much play of the tax rate, and I thought it important just to remind everyone why we are where we are.
The Government borrowed an additional £14 billion in 2020-21 and 2021-22 to fund the response to covid. I cannot imagine that any Opposition Member—including those on the Front Bench—actually disagreed with, for example, the furlough scheme, which protected more than 11 million jobs and companies throughout the country. However, that enormous sum has to be repaid. In response to the energy crisis, the Government have provided just over £100 billion to help households and businesses with higher energy bills in 2022-23 and 2023-24. That has contributed to a significant increase in our public debt, which is forecast to reach 100.6% of GDP in 2022-23, the highest level since the 1960s.
That has happened precisely because the Government have responded to the pandemic, to the international crisis in Ukraine and, importantly, to the knock-on effects that that has had on our cost of living. I cannot imagine that Labour Members really begrudge the support that we are providing—more than £3,000 for every household, including households in their constituencies, to help those people with the cost of living.
However, as my right hon. Friend rightly pointed out, we also believe in the principles of sound money. In the autumn statement, my right hon. Friend the Chancellor explained that some very difficult decisions had to be made. Indeed, even with the increase in the rate to 25% that was originally announced by the Prime Minister when he was Chancellor, we will still have a corporate tax system that remains one of the most supportive of business anywhere in the world, with the lowest headline rate of corporation tax in the G7, the joint most generous capital allowances regime for plant and machinery in the OECD, thanks to the full expensing in this Bill, and the joint highest uncapped headline rate of R&D tax relief support for large companies in the G7. That is in addition to the features of the corporate tax system that make the UK an attractive location as a global hub, including having the largest tax treaty network in the world, mitigating the risk of double taxation. I point out for the sake of clarification that at 25%, the rate of corporation tax will be lower than at any time before 2010 under the last Labour Government.
I will move on to the provisions in relation to pillar two. My right hon. Friend the Member for Witham (Priti Patel) raised some important questions, including about capital flight. We have looked carefully at this and I understand why she is asking about this. I hope she will be reassured that this has been at the forefront of negotiators’ minds as we have looked at this agreement. The rules contain defensive measures to prevent capital flight. If a country does not implement them, the top-up tax will be collected by other countries instead, so there is no incentive to move or escape from these rules.
My right hon. Friend also asked about the Chartered Institute of Taxation’s view that this measure might raise less than expected. Again, I hope she will be reassured that the costing for pillar two was certified by the Office for Budget Responsibility and published at the autumn statement. The estimates are that pillar two will raise £2 billion a year by 2027-28. This includes revenue arising from UK-headquartered groups that are subject   to low tax on their foreign operations, the diminished incentive for groups to shift their profits out of the UK and the qualified domestic minimum tax.
My right hon. Friend also asked about Japan. It has passed its legislation and it is implementing this in April next year, three months after we are legislating for. I hope that that timeframe gives her some comfort. I also note that 40 countries have implemented or announced pillar two or a similar rule, and I am told that they make up around 60% of global GDP. It is precisely because of the interlocking nature of the rules that revenues will be taxed at 15%, no matter where they are shifted. I am going to move on to three new clauses that I have a feeling might be the cause of contention and therefore Divisions tonight, but I will happily write to the hon. Member for Aberdeen North (Kirsty Blackman) about her point on data licences, because I want to reassure her on that.
On new clause 1, the Government are committed to sharing expertise on implementation and to co-ordinating our efforts internationally. We are playing an important and active role in the design of pillar two rules and we are achieving the delicate balance between having rules that are effective in tackling profit shifting and being proportionate. It would not be appropriate to provide a running commentary on international discussions ahead of the agreed outcomes of these meetings, which are published by the OECD, including in the administrative guidance to the rules published in February. We therefore say that the new clause is unnecessary and we urge colleagues to vote against it if it is pushed to a Division.
New clause 3 would require the Government to conduct a review of the UK’s business tax regime. This is business as usual for the Treasury and the Government. We have done, and continue to undertake, significant work to understand the impact of tax incentives on business investment. The tax plan published at spring statement 2022 set out the Government’s vision for using the tax system to incentivise investment in capital assets and in research and development, and we have set out detailed information on the Exchequer, macroeconomic and business impacts of these policies at the Budget. The evidence for this continuing work lies in both the full expensing policy in clause 7 and the increase to the annual investment allowance in clause 8, both of which I trust the Opposition will support.
I remind colleagues that the full expensing policy is equivalent to a £27 billion tax cut for businesses over three years. It saves eligible businesses 25p in tax for every £1 they invest. That is the Conservative approach to sound money, and that is what we will do to help grow our economy. The impact of our plan to halve inflation, to grow the economy and to reduce debt is demonstrated in the rising confidence of finance executives, as reported in the recent Deloitte survey. Do not listen to the doom-mongers opposite; listen to British businesses.
Turning to new clause 6, the Government expect the energy profits levy to raise just under £26 billion between 2022-23 and 2027-28, helping to fund the vital and unprecedented cost of living support orchestrated by this Government. This includes the impact of the investment allowance. HMRC regularly publishes estimates for the cost of various tax reliefs where relevant data is available and identifiable in tax returns. For example, estimates for the cost of the investment allowance against the supplementary charge and the first-year allowance of  the ringfencing regime are regularly included in that publication. HMRC intends to make a cost estimate for the investment allowance against the energy profits levy in due course.
We have always been clear that we want to see significant investment from the sector to help protect our energy security. Oil and gas accounted for 77% of the UK’s energy demand last year and, as set out in the energy security strategy, the North sea will still be a foundation of our energy security, so it is right that we continue to encourage investment in oil and gas. Supporting our domestic oil and gas sector is not incompatible with net zero 2050, as we know we will need oil and gas for decades to come.
As the energy crisis in the UK has shown, constraining supply and dramatically increasing prices does not eliminate demand for oil and gas. A faster decline in domestic production would mean importing more oil and gas at greater expense, potentially resulting in additional emissions, especially in the case of gas.
On the climate targets, the Treasury carefully considers the impact of all measures on the UK’s climate change commitments as a matter of course. It should be noted that the Government have made the UK a climate leader and have reduced emissions faster than any G7 country over the last 30 years. We are on track to deliver our carbon budgets and on course to reach net zero by 2050, creating jobs and investment across the UK while reducing emissions.
I hope I have been able to reassure Members. I have genuinely enjoyed the scrutiny they have brought to this important piece of legislation. I urge the Committee to reject new clauses 1 to 3 and 6 to 10, and amendment 26. For the reasons I set out at the beginning, I commend Government amendments 12 to 13 and 15 to 20.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clauses 6 to 10 ordered to stand part of the Bill.

Schedule 1 - Relief for Research and Development

Amendment made: 14, page 283, line 27, at end insert—
‘(3) In section 1057 (R&D relief for SMEs: tax credit only available where company is a going concern), after subsection (4C) insert—
“(4D) For the purposes of this section, where a company (“A”) is a member of the same group as another company (“B”) and A’s latest published accounts were not prepared on a going concern basis by reason only of a relevant group transfer, the accounts are to be treated as if they were prepared on a going concern basis.
(4E) For the purposes of this section—
(a) a “relevant group transfer” is a transfer, within the accounting period to which the latest published accounts relate, by A of its trade and research and development to another member of the group mentioned in subsection (4D);
(b) A and B are members of the same group if they are members of the same group of companies for the purposes of Part 5 of CTA 2010 (group relief).”’ —(Victoria Atkins.)
This amendment would make an amendment to section 1057 of the Corporation Tax Act 2009 that is equivalent to the amendments being made by the Bill to sections 104T and 1046 of that Act.
Schedule 1, as amended, agreed to.
Clauses 11 to 15 and 121 to 125 ordered to stand part of the Bill.
Schedule 14 agreed to.
Clauses 126 and 127 ordered to stand part of the Bill.
Schedule 15 agreed to.
Clauses 128 to 173 ordered to stand part of the Bill.

Clause 174 - Amount of covered tax balance

Amendment made: 12, page 119, leave out lines 4 to 8.—(Victoria Atkins.)
This amendment omits Step 4 in clause 174(1). That Step is unnecessary as it duplicates the effect of provision in clauses section 175(2)(e) and 176(2)(i).
Clause 174, as amended, ordered to stand part of the Bill.
Clauses 175 to 222 ordered to stand part of the Bill.

Clause 223 - Adjustments

Amendment made: 13, page 163, line 19, at end insert—
‘(10) Where the covered tax balance of an investment entity includes an amount allocated to it under section 179(1) or 180(3)(a) (allocation of tax imposed under controlled foreign company tax regimes), only so much of its covered tax balance as is not comprised of amounts allocated under those sections is subject to adjustment under this section.’.—(Victoria Atkins.)
This amendment prevents adjustments being made to the covered tax balance of an investment entity in relation to amounts of controlled foreign company tax allocated to the entity (to avoid the same adjustments being effectively made twice).
Clause 223, as amended, ordered to stand part of the Bill.
Clauses 224 to 260 ordered to stand part of the Bill.

Schedule 16 - Multinational top-up tax: transitional provision

Amendments made: 15, page 395, line 8, leave out paragraph (a) and insert—
‘“(a) assets are transferred from one member of a multinational group to another member of that group,
(aa) either—
(i) the Pillar Two rules do not apply to the transferor for the accounting period in which the transfer takes place, or
(ii) an election under paragraph 3(1) (transitional safe harbour) applies in relation to the transferor for that period, and’.
This amendment provides for the anti-avoidance provisions in relation to intragroup transfers to apply to transfers from a member of a multinational group until that member is fully subject to the Pillar Two regime.
Amendment 16, page 395, line 17, leave out “beginning of the commencement period” and insert “relevant time”.
This amendment is consequential on Amendment 15.
Amendment 17, page 395, line 19, leave out from “transfer,” to end of line 24 and insert “and”.
This amendment is consequential on Amendment 15.
Amendment 18, page 395, line 27, leave out from “assets” to end of line 32.
This amendment is consequential on Amendment 15.
Amendment 19, page 395, line 32, at end insert—
‘(3A) For the purposes of this paragraph “the relevant time” means the later of—
(a) the date of the transfer, and
(b) the commencement of the first accounting period in which—
(i) the Pillar Two rules apply to the transferee, and
(ii) an election under paragraph 3(1) (transitional safe harbour) does not apply in relation to the transferee.
(3B) Where the relevant time is after the date of the transfer—
(a) the value of the assets at the relevant time is to be adjusted to reflect—
(i) capitalised expenditure incurred in respect of the assets in the period between the date of the transfer and the relevant time, and
(ii) amortisation and depreciation of the assets that, had the transfer not occurred, would have been recognised by the transferor if the transferor had continued to use the accounting policies and rates for amortisation and depreciation of the assets previously used, and
(b) the tax paid amount in relation to the transfer of the assets is to be adjusted to reflect the matters referred to in paragraph (a)(i) and (ii).’
This amendment is consequential on Amendment 15.
Amendment 20, page 398, leave out lines 36 and 37 and insert—
‘(3A) Information derived from qualified financial statements as to revenue or profit (loss) before income tax must be adjusted—
(a) as the information was adjusted for the purposes of its inclusion in a qualifying country-by-country report in relation to the territory, or
(b) if the information was not included in such a report, as it would have been adjusted had it been included in such a report.
See also paragraph 6 which provides for circumstances in which further adjustments are required to profit (loss) before income tax and circumstances in which adjustments are required to qualifying income tax expense.’—(Victoria Atkins.)
This amendment makes it clear that in determining whether the transitional safe harbour provisions apply for the purposes of multinational top-up tax, revenue and profits are to be as stated in a country-by-country report, or adjusted as if they were included in such a report.
Schedule 16, as amended, agreed to.
Clause 261 ordered to stand part of the Bill.
Schedule 17 agreed to.
Clauses 262 to 275 ordered to stand part of the Bill.
Schedule 18 agreed to.
Clauses 276 and 277 ordered to stand part of the Bill.

New Clause 1 - Statement on efforts to support implementation of the Pillar 2 model rules

‘(1) The Chancellor of the Exchequer must, within three months of this Act being passed, make a statement to the House of Commons on how actions taken by the UK Government since October 2021 in relation to the implementation of the Pillar 2 model rules relate to the provisions of Part 3 of this Act.
(2) The Chancellor of the Exchequer must provide updates to the statement at intervals after that statement has been made of—
(a) three months;
(b) six months; and
(c) nine months.
(3) The statement, and the updates to it, must include—
(a) details of efforts by the UK Government to encourage more countries to implement the Pillar 2 rules; and
(b) details of any discussions the UK Government has had with other countries about making the rules more effective.’—(James Murray)
This new clause would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.
Brought up, and read the First time.
Question put, That the clause be read a Second time.

The Committee divided: Ayes 227, Noes 306.
Question accordingly negatived.

New Clause 3 - Review of business taxes

‘(1) The Chancellor of the Exchequer must, within six months of this Act being passed—
(a) conduct a review of the business taxes, and
(b) lay before the House of Commons a report setting out recommendations arising from the review.
(2) The review must make recommendations on how to—
(a) use business taxes to encourage and increase the investment of profits and revenue;
(b) ensure businesses have more certainty about the taxes to which they are subject; and
(c) ensure that the system of capital allowances operates effectively to incentivise investment, including for small businesses.
(3) In this section, “the business taxes” includes any tax in respect of which this Act makes provision that is paid by a business, including in particular provisions made under sections 5 to 15 of this Act.’—(James Murray.)
This new clause would require the Chancellor to conduct a review of business taxes, and to make recommendations on how to increase certainty and investment, before the next Finance Bill is published.
Brought up, and read the First time.
Question put, That the clause be read a Second time.

The Committee divided: Ayes 233, Noes 302.
Question accordingly negatived.

New Clause 6 - Review of energy (oil and gas) profits levy allowances

‘(1) The Chancellor of the Exchequer must, within three months of the passing of this Act—
(a) conduct a review of section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022, as introduced by subsection 12(2) of this Act, and
(b) lay before the House of Commons a report arising from the review.
(2) The review must include consideration of the implications for the public finances of the provisions in section 2(3)—
(a) were all the provisions in section (2)(3) to apply, and
(b) were the provisions in section 2(3)(b) not to apply.’ —(James Murray.)
This new clause requires the Chancellor to review the investment allowances introduced as part of the energy profits levy, and to set out what would happen if the allowance for all expenditure, apart from that spent on de-carbonisation, were removed.
Brought up, and read the First time.
Question put, That the clause be read a Second time.

The Committee divided: Ayes 232, Noes 299.
Question accordingly negatived.
The occupant of the Chair left the Chair (Programme Order, 29 March).
The Deputy Speaker resumed the Chair.
Progress reported; Committee to sit again tomorrow.

Business without Debate

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Animals

That the draft Microchipping of Cats and Dogs (England) Regulations 2023, which were laid before this House on 13 March, be approved.—(Andrew Stephenson.)
Question agreed to.

Petition

Petition - Local post office closure

5.13 pm

Zarah Sultana: I rise to present a petition on behalf of the residents of Coventry South regarding post office services in the Quinton Park area of Cheylesmore. The petition notes the vital services local post offices provide and highlights the importance of them being easily accessible for those with mobility issues. It further notes that since the Daventry Road post office in Cheylesmore closed, there has been a loss of service in this area. The petitioners therefore urge the House of Commons to support better provision of post offices in the community and specifically for a post office to open that serves the community of Quinton Park, Cheylesmore.
Following is the full text of the petition:
[The petition of residents of the constituency of Coventry South
Declares that local Post Offices provide a vital service for the community, further declares that it is particularly important that they are nearby and easily accessible for older people and people with mobility difficulties, notes that the closure of Daventry Road Post Office in Cheylesmore, Coventry, resulted in the loss of this service in the area.
The petitioners therefore urge the House of Commons to support better provision of Post Offices in the community, and specifically for the Post Office on Daventry Road to serve the community of Quinton Park, Cheylesmore, Coventry.
And the petitioners remain, etc.]
[P002828]

In-patient Abuse: Autistic People and People with Learning Disabilities

Motion made, and Question proposed, That this House do now adjourn.—(Andrew Stephenson.)

Barbara Keeley: The abuse of autistic people and people with learning disabilities is not raised frequently enough in this House. I am glad to have secured this debate today to outline some of the issues and to stress the urgency of the situation. The Government’s record on the scandals I am about to describe has been appalling. I would like to begin with the experiences of two young autistic women who were detained in in-patient units commissioned by the NHS.

Robert Buckland: I am very grateful to the hon. Lady for giving way. Before she goes into those two harrowing cases, the Government set themselves a target to reduce the number of people in mental health detention—let us call it that—by half by March next year. At current progress, they will not hit that target until 2028. What would be her words to the Government to ensure that they get on with it and start releasing people back into the community?

Barbara Keeley: I thank the right hon. and learned Gentleman for his intervention. That is very much the sentiment I will be expressing in this debate tonight, but I would go further and say we cannot just accept continual targets. I will remind Members that the original target was to reduce to zero the number of people in inappropriate in-patient units, and I shall say that that is the target we should get back to.
As I said, I would like to begin with the experiences of two young autistic women who were detained in in-patient units commissioned by the NHS. Their stories were told recently in a powerful Channel 4 “Dispatches” programme, on which they and their families spoke with immense bravery about the abuses they faced. I encourage all Members to watch it.
Amy is a 22-year-old autistic woman who was, until recently, detained at the Breightmet Centre for Autism in Bolton, run by ASC Healthcare. The unit is supposed to provide care tailored to the needs of autistic people that would not be available on a general psychiatric ward. While she was detained at the Breightmet Centre, Amy said that her eating disorder actually worsened and that “it’s all about punishment”, not treatment. Amy reported that not a day went by when staff members did not use restraint and that the threat of violence was used to make patients conform. She said:
“They’ve chucked me about…they will nip you, they have pulled my hair out, they will push your wrists down. When I tell them it hurts they do it more”.
After staff at Breightmet were told that Amy had spoken out in the Channel 4 documentary, they took her phone away from her. When she got it back, she sent photos of dark bruises covering her arms.
Amy was moved to a different hospital and the Care Quality Commission has taken further enforcement action against the Breightmet Centre, stating that
“if there is not rapid, widespread improvement”
it
“will start the process of preventing the provider from operating the service.”
The CQC reports there are still 12 patients at the Breightmet Centre, and I am deeply concerned that they may be having similar experiences to the abuse suffered by Amy. It should not have taken a TV programme for the CQC to take action, because the Breightmet Centre has been placed in and out of special measures since 2019. Amy had to return there even after the CQC rated it as inadequate in 2022—it was rated not safe, effective, caring or well-led.
Danielle is another young autistic woman who told her story to the Channel 4 “Dispatches” programme. Like many autistic people admitted to in-patient units, Danielle has spent not weeks or months but years detained. In one unit she was 320 miles away from her family. Her mother Andrea reported that Danielle had lost half her life—13 years—spent in hospital in-patient units. While she was held at the Littlebrook Hospital in Dartford, Danielle was placed in solitary confinement for 551 days—more than 18 months. She was locked in a room with just a mattress on the floor and drugged heavily. According to the UN’s special rapporteur on torture and other cruel, inhuman or degrading treatment or punishment, confinement lasting for more than 15 days and lacking meaningful engagement constitutes torture. Danielle endured that for 551 days, a punishment not even inflicted on violent criminals. Yet Kent and Medway NHS and Social Care Partnership Trust paid to impose that treatment on a young woman whose only offence was to be autistic in a society that does not understand or support that diagnosis.
Solitary confinement in those units is so commonplace that data on the practice is collected and published by NHS England and broken down by the kind of restraint used, from chemical injection to prone physical restraint and seclusion. From those datasets we can see that more autistic people and people with learning disabilities are held in solitary confinement now than three years ago. That is a failure of care, and people such as Danielle are paying the price.
Danielle’s story gets even worse. Her mother Andrea told the “Dispatches” programme that during her stay at Littlebrook Hospital, Danielle was taken by staff members to areas away from cameras. She was then molested and raped. That is no isolated incident. Further investigation by the “Dispatches” team found that 18 reports of sexual assault and 24 reports of rape at Littlebrook Hospital were made to the police between 2020 and 2023. No charges have been brought in any of those cases to date, including Danielle’s case. The programme later showed Danielle on a ward in a general hospital being surgically fed through a tube, because she is now refusing to eat. Danielle’s mother said:
“After 13 years of trauma and neglect, she can’t see an end to it, so she’s been starving herself. She just wants this to stop.”
As the Minister hears these stories and listens to the words of those parents speaking out, I wonder whether she really believes that the right support is being given to autistic people. I hope that she can pledge action to help Danielle. I understand that Danielle needs housing so that she can move back to the community with support. Will the Minister look at her case, to avoid Danielle being shifted from facility to facility? Her life  seems to be at risk. I have discussed the case with the family’s MP, the hon. Member for Maidstone and The Weald (Mrs Grant).

Jim Shannon: I commend the hon. Member for Worsley and Eccles South (Barbara Keeley) on bringing this subject forward. She has outlined two tragic and poignant cases, and I commend her on the respectful way that she has done so. In Northern Ireland, the Muckamore inquiry recently brought to light the abuse of people in care. I had a mother in my office whose heart broke when it happened to her child. Some 2,045 people are detained in in-patient settings, and a lot of families only want the best for their loved ones. Does the hon. Lady agree this problem does not just pertain to the individual but affects the entire family circle? That is the wider aspect that we need to look at.

Barbara Keeley: I very much agree. What the hon. Gentleman says is true; I have seen many reports from Muckamore and I know that there are similar issues. It is desperate for the parents and the families because they rightly sought help for their children, but they ended up being abused and their lives are ebbing away—particularly those with eating disorders, who are not getting the support that they need.
The truth is that the abuses experienced by these two young women have been mirrored in similar scandals across the country. There was a toxic culture of abuse at the Edenfield Centre, revealed by BBC “Panorama” last September. There were the preventable deaths of three adults with learning disabilities held at Cawston Park hospital, who were subjected to torture and neglect, including the appallingly named “crucifix restraint”. At Cygnet Yew Trees hospital, staff members were arrested after reports that they kicked, slapped and dragged around the autistic women and women with learning disabilities being held there. Before that was the BBC “Panorama” exposé of the scandal at Whorlton Hall, which I cannot discuss in any detail due to ongoing legal cases.
All those reports were preceded by the scandal at Winterbourne View, revealed by BBC “Panorama” in 2011. Members will remember the scale of the outcry when that programme was broadcast. There was a feeling then that something might change. I remind the Minister that the coalition Government actually committed to closing all inappropriate in-patient beds for autistic people and people with learning disabilities by 2014.
At one time, reports and investigations into the scandals gave rise to the hope of change, but despite the relentless efforts of journalists, charities and activists, the criticisms reported in the CQC’s inquiry into Winterbourne View all that time ago are as true today as they were 12 years ago: there is a
“systemic failure to protect people or to investigate allegations of abuse”.
Each of the scandals I have outlined across the decade, from the events at Winterbourne View to those at the Edenfield Centre, shows striking similarities. I encourage Members and the Minister to read the safeguarding adults review on Whorlton Hall and to decide whether anything has changed since the inquiry into Winterbourne View, despite all the promises of action.
More recently, we seem to have entered a phase of total apathy. Each scandal that hits national TV or the press results in a more muted and defensive response from the Government. As calls to address repeated failed targets grow more desperate, less and less appears to be happening to rectify the situation.
In February, NHS England quietly published a report analysing 1,770 individual reviews of the care of autistic people and people with learning disabilities, including children, who were detained in in-patient services. The report was commissioned following the tragic deaths of Joanna, Jon and Ben at Cawston Park. It found evidence of high levels of restrictive practice, that people’s medication was not always reviewed in a timely way and that more than half the people were being detained a long way from home. Most concerningly, the report found that 41% of people did not need to be in hospital at all. NHS England stated that many people could not be discharged because there was no adequate care provision in the community and because staff did not always have the training necessary to support people’s transfer from hospital. These findings are a deplorable indictment of the Government’s failure to act.
We are now 13 years on from the inquiry into Winterbourne View and not a single Government target to reduce the use of in-patient beds has been met, as referred to by the right hon. and learned Member for South Swindon (Sir Robert Buckland) in his earlier intervention. After the coalition Government’s ambition to close all in-patient beds by 2014, a succession of watered-down targets have been announced over the years, none of which has been met. As the right hon. and learned Member said, the goal is now to close 50% of in-patient beds by March next year, but it looks impossible for the Government to meet even that much-delayed target. The latest data indicates that bed numbers will reduce not by half but by around only a quarter in 2023, compared with the 2015 benchmark.
Over the last three years, even the meagre progress made earlier has stagnated. The number of autistic people and people with learning disabilities in mental health hospitals has actually increased since the publication of the Government’s Building the Right Support action plan last July, which was meant to drive cross-Government action.
There is also a problem with the data itself, whereby data for past months is retrospectively amended, sometimes by quite large margins. That makes it difficult to understand with any accuracy how many people are being detained. Getting the data right really matters. When the risk of abuse is as high as the evidence suggests, it is a dereliction of duty to have so much variation in data collection. How are the Government supposed to measure progress when the targets keep shifting?
A similar story can be told when it comes to financial investment in the Building the Right Support agenda. The Government’s own review from last summer stated that
“the limited ability to analyse financial data…to provide a national perspective is a significant barrier to the effective oversight and management of the BtRS programme overall.”
An answer to my written parliamentary question confirmed that the Department of Health and Social Care did not hold data on how much money had been spent on developing community services for autistic people and people with learning disabilities, either since  2015 or since the Winterbourne View scandal in 2011. The data that was provided instead of the data I asked for showed that investment in community services had actually fallen between 2021-22 and 2022-23, from £62 million to £51 million, and that funding for discharging long-stay patients has remained frozen, despite the fact we now have rocketing inflation, meaning soaring costs to providers. That financial picture is clearly unacceptable.
In her response, the Minister may want to point to the draft Mental Health Bill. While the draft Bill includes some provisions to address the detention of autistic people and people with learning disabilities, concerns have been raised by charities that the Bill must be significantly strengthened if it is to achieve its aims. There are also concerns that the Bill will take years to come into force and will not end the scandal on its own, without urgent investment in both social care and mental health services.
In the meantime, last year’s Building the Right Support action plan is woefully inadequate. Not only was it published a full 11 years after Winterbourne View, but it is vacuous, it is unambitious and it has been derided by organisations working in the sector. I believe that to call it an action plan is absurd. Instead of a fully funded strategy for caring for people at home rather than in hospital, the Government have established the Building the Right Support delivery board, which is responsible for monitoring the commitments in the Building the Right Support action plan. After so many years of allowing mistreatment to continue, it seems pathetic that the best system of accountability the Government can come up with is a delivery board that I have discovered has met for only six hours in the 22 months since it was established.
We know from more than a decade of reports and evidence that investment in social care, in community support and in the workforce is critical to reducing the number of autistic people and people with learning disabilities who are detained in inappropriate in-patient settings. However, the Government have just announced that they are halving the already pitiful £500 million budget for the social care workforce for the next three years. I believe that that will have a severe impact on a workforce who are already overstretched and are operating with a vacancy rate of 11%. I ask the Minister what assessment her Department has made of the repercussions that the cut to the social care workforce budget will have on the quality of care.
I could go on listing the repeated failures of successive Conservative Governments to do anything about the matter. The fact is that well over 2,000 autistic people and people with learning disabilities are still being held in inappropriate in-patient units. Approximately one in 12 are being held in units rated inadequate by the CQC. Some 40% have been there for more than 10 years. Fewer than ever have a planned date of discharge. Many people are being detained far from home. The risk of abuse is shockingly high, as we saw in the cases highlighted by Channel 4’s “Dispatches” programme, yet at every turn Government Ministers have lacked any humility. Nor have they made any apology for their abject failure to get a grip on this national scandal.
I hope the response this evening will be different. Will the Government now finally stop choosing to ignore the issue? Will the Minister instead offer assurances that  her Department will take urgent action to end the inappropriate detention of autistic people and of people with learning disabilities, which is destroying the lives of so many people detained and their families?

Maria Caulfield: I thank the hon. Member for Worsley and Eccles South (Barbara Keeley) for securing an Adjournment debate on this really important issue. I hope she will see from my response that we are by no means complacent about it. It is appalling to see reports of the care and treatment that some autistic people have experienced, and we absolutely take them very seriously.
As the Minister responsible for patient safety, I have made it clear to the House that everyone in an in-patient mental health facility is entitled to high-quality care and treatment and should be safe from harm. These are very vulnerable people who should feel safe and looked after in any in-patient setting: that applies to all patients admitted, but particularly to people with a learning disability and autistic people.
When in-patient care is absolutely necessary, it needs to provide a therapeutic benefit. It should be high quality, it should be close to home, and it should be as unrestrictive and for as short a time as possible—we have been very clear about that. Abuse cannot and will not be tolerated. That is why we are committed to taking steps at a national level to prevent the abuse and poor treatment of people with a learning disability and of autistic people in in-patient settings.
As we announced in January, the Government have commissioned a rapid review, independently chaired by Dr Geraldine Strathdee, of mental health in-patient settings. The review is focusing on how we use data and evidence, on how we respond to complaints, on how we listen to feedback and on how whistleblowers can raise the alert to identify risks to safety in in-patient settings.
I have met many Members across the House with concerns about in-patient care in their constituency. We absolutely take the issue seriously. We want to ensure that the right people get the right information, so patients get the care and support they deserve, and to ensure that if there are concerns, we can identify them as early as possible.

Barbara Keeley: There is obviously a considerable amount of detail in both what the Minister is saying and what I covered in my speech. However, the Breightmet Centre in Bolton, where Amy was detained, has been in and out of special measures, and it is inadequate. Amy was sent back to the unit and abused further, although the centre had been declared inadequate across all its settings. I am therefore finding it difficult to align what the Minister is saying with the actual situation. The list of scandals that have emerged since Winterbourne View extends across the country. We keep finding extra hospitals in which people have been abused, including Littlebrook Hospital in Kent. The CQC is taking some action, but these places are still open, they still have patients, and patients are being abused. How does what the Minister is saying line up with the reality out there?

Maria Caulfield: As I have said, we instigated a rapid review in January to examine the national picture across England because we wanted to see what was being done  in in-patient settings. This will include looking at the data concerning the use of restraints, the safety of patients, how concerns are flagged and how many patients are being treated out of area, because that does increase the risk. However, the review—which will report very soon—does not prevent us from investigating further particular concerns about particular in-patient units, and once it has been published we will come to the House to update Members in response to many of the points that the hon. Lady has raised about specific in-patient settings.

Barbara Keeley: As I have said, there has already been a review. NHS England published a report on the 1,770 individual reviews of the care of autistic people and people with learning disabilities, including children, who had been detained. As I also said, that report was commissioned following the tragic deaths at Cawston Park, and revealed that there were high levels of restrictive practice and that 41% of people did not need to be in hospital at all but could not be discharged.
Does the Minister not accept that things are going seriously wrong, and that there is not the necessary provision in the community or the necessary training of staff to work with people? I cited the case of Danielle, and I hope the Minister will look at that case, along with the hon. Member for Maidstone and The Weald (Mrs Grant), because it is an example of someone being moved around for 13 years of her life, from one inappropriate facility to another. We are destroying lives, in many cases young people’s lives, because this often starts with children and teenagers.

Maria Caulfield: I will come on to what we are doing to try to keep people out of hospital, and to get others discharged. We fully recognise that there are too many people in in-patient settings at present, but we also want to ensure that when people are in an in-patient setting and need to be there, the service is safe and they do not come to harm.
NHS England has established a three-year quality improvement programme which seeks to tackle the root causes of unsafe, poor-quality inpatient care. We all acknowledge that there has been practice that has caused harm to patients. We want to see the picture across the country, and then look at specific trusts that are not providing the standard of care that patients and their families expect. Baroness Hollins is overseeing independent care and treatment reviews relating to people in long-term segregation, and a senior intervener pilot has been undertaken to help individuals in the most restrictive settings to be moved towards discharge. Work is being done to examine the specific units about which we have concerns.
The CQC, which the hon. Lady mentioned, has a central role in identifying cases of poor in-patient care and taking immediate action when that is necessary. We acknowledge that some settings are not delivering the high quality of care that everyone deserves, and we want to ensure that we are setting standards so that units, integrated care boards and commissioners are aware of the standards that should be expected and can raise concerns when they are not being met.

Barbara Keeley: As I said towards the end of my speech, around one in 12 of the 2,000 autistic people and people with learning disabilities being held in these   inappropriate units are being held in units rated by the CQC as inadequate. The Breightmet Centre in Bolton, run by ASC Healthcare, has been in and out of special measures and is rated inadequate. Why is the Minister allowing people to be held in those units? She is talking about setting standards, but that is not an adequate standard. Would it not be a good place to start to say that no one with autism or learning disabilities can be held in a unit that is rated inadequate? That is an incredibly low bar.

Maria Caulfield: Admissions to services that are rated inadequate are an absolute last resort, and they should be being done with patients and their families being consulted and consenting to being placed in those units. We are minimising the number of new admissions to a unit that has been rated inadequate and we are working with the CQC to see how those units can be better supported to improve the quality of the service they offer.
The hon. Lady touched on funding. We are investing £121 million in this financial year across community support for people with learning abilities and autistic people as part of the NHS long-term plan. We are recruiting 27,000 mental health workers and we are on track to meet that target to increase the support available in the community. It is absolutely the solution to look after people in their communities with the care that they need so that admission to hospital—which, as she points out, is often not just for days or weeks or even months—is the absolute last resort.
The hon. Lady touched on the Building the Right Support action plan. We are drilling down on implementing the actions. We have short-term and long-term actions, and some of the work has had an effect already. At the end of February this year, the number of people with learning disabilities and autistic people in a mental health in-patient setting was 2,045, so we are seeing a reduction. That is a net decrease of 860 people, or 30%, since March 2015. Unlike someone with a physical health need, which can be quite complex in terms of planning their discharge, it is not just a case of finding people homes; they often have to have the right support in those homes. It is not just a case of providing them with support, because they often need complex support. The in-patients who still need to be discharged are the more complex cases, who, as the hon. Lady has pointed out, have often been in hospital for years. Adapting to moving back into the community is not an easy process for them, and that is why it is taking time to get them the packages of care that they need.

Barbara Keeley: I just wonder how the Minister can reconcile the figures as if they were increasing when I have told her that we found, through written parliamentary questions trying to get to the financial picture, that the investment in community services actually fell between 2021-22 and 2022-23, from £62 million to £51 million. With rocketing inflation and soaring costs to providers, that funding needs to increase.
I recommend that the Minister consider the issue of dowries, as was suggested in the Health and Social Care Committee’s report on this issue a few years ago. Time and again we find situations where a county council or urban council responsible for social care does not have the funding to provide that support. Millions and millions  are being spent. We do not even know how much these placements cost, but some of them are very expensive. I am sure the Minister is aware of how expensive they can be. Decades ago, when we discharged people from long-term psychiatric institutions, a dowry accompanied them. We talked about Danielle’s case. If there were a system of dowries, Kent County Council could have the funding to provide her with housing and support. I have never understood why such a system has not been brought in. We included that in our Select Committee report. Cost-shunting is really a factor here. Local authorities do not have to fund an NHS England place, and that is part of the problem, yet we never get around to tackling that.

Maria Caulfield: The hon. Lady is right; a number of organisations are responsible for caring for people in the community, and it is often about pulling those organisations together. That is why we have the integrated care boards, which now have responsibility for looking after people with learning disabilities or autism and helping with their discharge.

Barbara Keeley: It is not just about responsibilities; it is also about the budget to go with those responsibilities. If the budgets were transferred from NHS England, which is shelling out millions for these inappropriate units, to the ICBs, I could see it working. It certainly worked all those years ago for discharges into the community. I was a councillor and vice-chair of social services in Trafford, and we might get a dowry of £1 million to settle someone from a long-term psychiatric hospital. That is the sort of funding we need to be thinking about, and it does not happen.

Maria Caulfield: A key reason why we sometimes find it hard to discharge someone from an in-patient setting is the housing element. We have capital funding available. I recently met ICB chairs and chief executives to encourage them to ask their local councils—particularly district councils, which do the planning element—to consider the funding that is available. The county councils, the upper-tier authorities, are often responsible for care, so it is about joining up the funding, but we are not building the right type of housing to support people back into the community. The capital funding is there. Sometimes one of the frustrations is making sure that the money flows with the patient so that they are able to get the care they need, but sometimes the money is there and it is about joining up the services to make it happen.

Barbara Keeley: Is the Minister saying that there is unspent money that could be used or transferred to local authorities? If so, how much is available? I have asked written questions about this, but it seems to me that the money has tailed off. Whether it is money to help pay for housing or money to pay for workforce improvements, the Government have halved the funding. People need housing and they need support, and those elements have been cut back.

Maria Caulfield: There is capital funding available to build supported housing for people with a learning disability or autism, which is why I recently encouraged a number of ICBs to make bids for funding at a local level.
We have made good progress on reducing the number of people with a learning disability in mental health hospitals. We are not where we want to be. Of course, we want every person who is able to be discharged to be either at home or in the community. I recognise that there is work to be done, but the number of in-patients with a single diagnosis of a learning disability and the number of in-patients with both a learning disability and autism are down from March 2015.
I am very happy to keep the hon. Lady updated on the work we are doing. We will be meeting the Building the Right Support team again very soon for an update on progress, but I recognise her point. The two elements for me are that we need to get more people out of hospital, whether by providing the care and support they need through the 27,000 extra mental health staff and by focusing on building resilience in the community, or, when someone needs to be an in-patient, by making the experience as safe and as therapeutic as possible. I have previously made it clear from the Dispatch Box that we will not accept poor care in in-patient settings. Once the independent rapid review reports back very soon, we will set out the next steps to improve safety in such settings.

Barbara Keeley: The Minister has mentioned the Building the Right Support delivery board, and I have said that I see it and the plan as vacuous and unambitious. It has been derided by the organisations in the sector that work with it. There is not a lot of confidence in it. I have also quoted to her something that we found out by asking questions about it: the delivery board, which is meant to be driving cross-departmental Government action on this important area to those 2,000 people and their families, has met for only six hours in the 22 months since it was established. How is that enough? It is not exactly a powerhouse is it, with six hours of meetings in all that time?

Maria Caulfield: The work goes on in between the meetings. The meeting reports back to update members of the board on specific areas, but the work is happening on a daily basis to both improve the safety and quality of the care that patients are receiving, and to get patients home where they are able to be discharged. That is our absolute focus. I will be able to update the hon. Lady further once the rapid review is completed very soon, and I absolutely take her points on board.
I do not want anyone to be in an in-patient setting unless they absolutely have to be, and if they are in such a setting they should be receiving good-quality, safe care, so that family members and friends can be reassured that their loved one is being looked after well. No one wants that more than me.
Question put and agreed to.
House adjourned.